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About Office Staff

The team at SWC simplifies complex tax issues, helps you build and leverage your wealth to enhance your personal and financial freedom, and offers unparalleled peace of mind at every step along the way.

Happy Tax Day! Care to Share a Happy Dance?

By |2022-04-18T13:54:23-07:00April 18, 2022|Categories: Taxes|Tags: , , |0 Comments

If you believe taxation is the price we pay for civilization and the social and civil institutions it supports, as it was suggested back in 1852 by a committee appointed by Vermont Gov. Charles K. Williams, then Happy Tax Day to you!

If on the other hand, you view taxes as an involuntary extraction from those engaged in economic production to those who control coercive power producing no reciprocal benefit, then read no further.

With today being Tax Day, we’ve decided here at SWC to flip the script on the dread associated with filing tax returns. Instead of replaying vinyl of The Beatles’ “Taxman,” quoting biblical references to the tax collectors in the temple, or reflecting on tea in Boston Harbor, we’ve chosen to step to the tune of the happy dance.

Now you’re probably thinking, “Of course CPAs and tax planning firms celebrate Tax Day. That’s how they make bank!” But if you take a deeper dive, beyond the oft-onerous task of tax preparation and the pain of paying those taxes and occasional penalties, there’s plenty to celebrate.

And so, in this post we shine the spotlight on all the positive aspects associated with paying taxes and filing tax returns.

Ka-Ching! Receiving a Tax Refund

Many momentous occasions bring joy to people’s lives — graduations, weddings, anniversaries, birthdays, and retirements among them. After preparing tax returns for tens of thousands of clients, the team here at SWC can add to that list the joy of receiving an annual tax refund, especially when it exceeds our client’s expectations.

In 2020, nearly 170 million people filed tax returns, and about 74 percent of them received a refund, which accounts for approximately 126 million refunds! The average refund: $2,549. Even though you earned it, it feels like easy money, free money, and it is certainly a cause for celebration.

Owing Taxes: A Celebration of Financial Success

Owing taxes at year’s end, especially when you already paid a hefty sum over the course of the year, can Continue reading… Continue reading… Continue reading…

Avoid Tax Sticker Shock: Review Your Income and Withholdings

By |2022-03-22T16:46:44-07:00March 22, 2022|Categories: Taxes|Tags: , , , |0 Comments

Nobody likes to get whacked at the end of the tax year with a higher-than-expected income tax bill or a smaller-than-expected refund, but that’s what happens when you don’t have enough money withheld from your paychecks or aren’t paying enough in estimated taxes.

The United States operates a pay-as-you-go tax system, which means you as a taxpayer are expected to pay taxes on your income as you earn it, not just at the end of the year. If you owe too much at the end of the year, the government charges you a penalty. You can think of it as interest on what you underpaid for the time you underpaid.

To avoid a nasty surprise when you’re preparing your tax return at the end of the year, review your income expectations and withholdings (and estimated taxes) at the beginning of the year and adjust as needed. This is especially important if you have any self-employment or investment income or income from other sources.

Using the IRS’s Tax Withholding Estimator

To help you determine your correct tax withholding, the Internal Revenue Service (IRS) provides an online Tax Withholding Estimator that you can use for free to determine whether you need to do one of the following:

  • Complete a new Form W-4, Employee’s Withholding Allowance Certificate and submit it to your employer
  • Make or modify your estimated tax payment to the IRS

Before you start, gather your income documents, including these: Continue reading… Continue reading… Continue reading…

Freelancers and Contractors Accepting PayPal, Venmo, and Crypto — What You Need to Know

By |2022-01-25T16:18:08-08:00January 25, 2022|Categories: Business Advice, Independent Contractor|Tags: , , , |0 Comments

We all accept the fact that each new year ushers in new or updated tax rules, regulations, deadlines, rates, and thresholds. However, changes for 2022 are most remarkable because of their impact on freelancers, independent contractors, and any business that accepts payment via an e-payment platform such as PayPal or Venmo.

Top among these changes affecting many of the above-mentioned freelancers, independent contractors, or businesses is the use of hard, soft, cold, hot, mobile, or digital wallets to accept payments available through cryptocurrencies, which are now perhaps stable enough for businesses to consider accepting.

Crypto and the IRS graphic

In this post, we give you a heads up on what to expect in 2022 so you won’t be blindsided at any point during the year ahead. Below, we offer insights into each of the following changes for 2022:

  • New reporting rules for payment apps
  • What you need to know about accepting cryptocurrencies
  • Upcoming tax deadlines
  • Changes to the standard deduction
  • Marginal tax rates for 2022
  • Increase in the earned income tax credit

To avoid any unpleasant surprises at year’s end, now is the time to get up to speed on the key changes below and adjust your tax and financial planning accordingly.

New Reporting Rules for Payment Apps

To reduce the amount of unreported taxable income flowing through e-payment platforms such as PayPal, Venmo, and Cash App, the Internal Revenue Service (IRS) is requiring such platforms to report each user’s business transactions if they exceed $600 for the year for goods or services.

The prior threshold for reporting was 200 transactions per year or a combined total of at least Continue reading… Continue reading… Continue reading…

2021 Year-End Tax-planning Tips for Business Owners

By |2021-12-08T14:55:45-08:00November 23, 2021|Categories: Taxes|Tags: , , , , , , , |0 Comments

As we covered in “2021 Year-End Tax-Planning Tips for Individuals,” what you do this year can make a big difference in how much you pay in state and federal tax next year. And perhaps more important if you’re a business owner, it can impact your net worth for decades to come.

Because it stands to reason the more you save on taxes, the more money you have to invest in your businesses and your own future.

Paying attention to tax rules and regulations and how they impact your business finances has become especially important in recent years with the flurry of changes in response to the global pandemic and its economic impact, major shifts in government policies (and spending), business slowdowns and shutdowns, and more.

In this environment of disruption and uncertainty, having a well-thought-out tax plan in place enables you to minimize your obligations while using your tax savings to protect and grow your business and personal wealth.

Here at SWC, we encourage business owners to schedule a year-end tax planning and financial strategy session with your CPA. And if you are a business client of ours, you already know that we can help you reassess your business taxes and finances, adjust your plan to optimize outcomes, and take any year-end steps that can save the business money and protect and grow your personal net worth.

In the meantime, whether you’re a client of ours or you work with another firm, here’s a look at some tax issues for business owners to consider as you approach year-end 2021: Continue reading… Continue reading… Continue reading…

2021 Year-End Tax-planning Tips for Individuals

By |2021-12-08T14:55:56-08:00November 17, 2021|Categories: Taxes|Tags: , , , , , , |0 Comments

When it comes to your personal finances, what you do this year will make a big difference in how much state and federal tax you pay next year (on April 15). It could also have an impact on your net worth for decades into the future.

That’s especially true this year when so many factors are likely to have impacted your taxes and finances — the lingering global pandemic, new tax laws, business slowdowns and shutdowns, supply chain disruptions, inflation, major shifts in government policies, and more. In this environment of relative disorder and uncertainty, having a well-thought-out tax plan in place empowers you to successfully meet the challenges, capitalize on new opportunities, and move forward with confidence.

Here at SWC, we encourage you to schedule a year-end tax and financial strategy session with your CPA. And if you are a client of ours, you already know that we can help you reassess your taxes and finances, adjust your plan to optimize outcomes, and take any year-end steps that can save you money and protect and grow your net worth.

In the meantime, whether you’re a client of ours or you work with another firm, here’s a look at some issues to consider as you approach year-end 2021: Continue reading… Continue reading… Continue reading…

The Business Benefit to Helping Your Employees Pay Off Their Student Loans

By |2021-10-11T13:10:39-07:00October 11, 2021|Categories: Business Advice|Tags: , , |0 Comments

Thanks to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 21, 2020, employers have a valuable new benefit they can offer to their employees — tax-free employer student loan assistance. And as you’ll see below, this benevolent act has tax advantages for your business.

According to the provision created by Section 2206 of the CARES Act, an employer can pay up to $5,250 in student loan payments for an employee each year, either to the student loan servicer or directly to the employee. Payments are tax-free for the employee, and the employer receives a payroll tax exclusion on that amount.

Originally intended to expire in 2020, the program has been extended through December 2025 under the Consolidated Appropriations Act (CAA), with those of us here at SWC believing it’s likely to be extended beyond 2025.

The Benefits of Helping Employees Pay Their Student Loans

As a business owner, you know that tax-free isn’t free. You pay for every benefit that you offer and that your employees take advantage of. The payroll tax exclusion slightly offsets the cost you incur, but employees benefit most in respect to the student loan relief and the fact that they don’t pay income tax on that compensation.

So, what’s in it for you? Consider the following potential benefits: Continue reading… Continue reading… Continue reading…

For Business Owners and Investors: California AB 150 — Pay More Taxes Now in Order to Pay Less in Taxes Later

By |2021-09-10T15:52:30-07:00September 10, 2021|Categories: Legislation|Tags: , |1 Comment

In December 2017, the Tax Cuts and Jobs Act (TCJA) became law, representing the most significant federal tax code overhaul in the United States in more than three decades. In part, the TCJA limited the state and local tax (SALT) deduction on federal tax returns to $10,000. In response, several states have enacted an elective pass-through entity tax as a workaround.

On July 16, 2021, California joined the group when its governor signed into law California Assembly Bill 150 (AB 150).

How California Assembly Bill 150 Works

A pass-through entity (PTE), which is also known as a flow-through entity or fiscally transparent entity, is a legal business structure wherein income flows through to the business entity’s owners and investors, rendering the income of the entity as the income of the owners or investors.

California AB 150 — Pay More Taxes Now in Order to Pay Less in Taxes Later

Here’s how California’s elective pass-through entity (PTE) tax works:

  1. A qualifying elective PTE pays 9.3 percent of qualified net income — the taxpayer’s share of income (including interest, dividends, and capital gains) from the PTE — to the California Franchise Tax Board (FTB).
  2. At year’s end, the PTE issues a federal K1 showing the taxpayer’s income from the PTE as 9.3 percent less than what the taxpayer received. This lowers the taxpayer’s federally reported income from the PTE by 9.3 percent.
  3. The taxpayer claims a credit on his or her state tax return equal to the PTE tax paid to the FTB.

Note: The pass-through entity tax reduces only the federally reported income, not state reported income. The PTE files a separate state K1 reporting 100 percent of what it paid the owner.

Here’s an example: Continue reading… Continue reading… Continue reading…

Employee or Independent Contractor? The Rule That Never Happened

By |2021-07-21T16:07:15-07:00July 21, 2021|Categories: Independent Contractor|Tags: , , , , |0 Comments

The more things change, the more they remain the same. Case in point: the U.S. Department of Labor’s guidelines for determining whether someone is an employee or an independent contractor. In September 2020, the Department of Labor (DOL) proposed a rule to clarify employee and independent contractor status under the Fair Labor Standards Act. This rule would have made it easier for workers to be treated as independent contractors instead of as employees. It was scheduled to take effect on March 8, 2021.

In late January 2021, a new administration moved in at 1600 Pennsylvania Avenue NW in Washington, D.C., and delayed the new rule’s effective date. Then they officially withdrew the rule. You could call it “the rule that never happened.” Whether that’s good or bad depends on your circumstances, but withdrawing the rule hasn’t made it any easier to determine whether a worker should be classified as an employee or an independent contractor.

Making this determination has always been a challenge, and it continues to be so. And the fact that some states have their own rules doesn’t help matters in the least. In this post, we explain the rules and tests to shed some light on this perplexing topic.

Why the Distinction Matters

Worker classification has always been a hot-button issue. Pro-business administrations typically lean toward relaxing the rules, so that businesses have more leeway in determining how workers are classified. Some businesses prefer to use independent contractors because they facilitate scalability and generally cost less than employees. In addition, when they have more leeway in deciding who’s an employee and who’s an independent contractor, maintaining compliance with labor laws and tax laws is easier.

Pro-worker administrations, on the other hand prefer that businesses classify more workers as employees to ensure fair treatment, compensation, and benefits. When businesses have more leeway in deciding whether a worker is an employee or independent contractor, some businesses choose to hire fewer employees or even lay off employees or place them on contract (instead of hourly pay or salary) and eliminate their protections and benefits under the law.

The Biden administration would like to see more workers classified as employees and favors an ABC Worker Classification-type Test at the federal level like the test used in several states. However, to date, no federal rule or law has been adopted that requires an ABC test.

The Economic Realities Test

Currently, the DOL uses the economic realities test to classify workers. The economic realities test considers a variety of factors, including the following: Continue reading… Continue reading… Continue reading…

First Look: The Biden Administration’s Proposed Tax Law Changes

By |2025-07-10T10:37:58-07:00July 9, 2021|Categories: Business Taxes, Tax Credits, Taxes|Tags: , , , |0 Comments

When a new administration settles into the White House, you can be certain there will be proposals to change the nation’s tax code. And as Walt Disney once famously said, times and conditions change so rapidly that we must keep our aim constantly focused on the future. And that’s the aim of today’s post.

The fact that the Biden administration is planning to raise taxes is no surprise. The President campaigned on a promise to raise taxes on corporations (from 21 to 28 percent) and on wealthy Americans (those earning more than $400,000 per year). If you ever complained that politicians never follow through on their promises, this is the one exception — the Biden administration will raise taxes. The only question is how?

In late May 2021, the U.S. Treasury Department presented a sneak peek into the administration’s proposed tax law changes in the form of a 114-page document commonly referred to as the “Green Book.” The proposed changes are part of two plans — the American Jobs Plan, geared more toward businesses, and the American Families Plan, focusing on individuals. In this post, we explain many of the proposed changes and highlight how they might impact your taxes moving forward.

The key word here is proposed. It’s too early to tell exactly which proposed tax changes will become law or the extent to which they’ll be modified as they move through Congress. Regardless, here’s what we know about The American Jobs Plan and how it might impact businesses:

The American Jobs Plan

The primary objective of The American Jobs Plan is to create millions of jobs while rebuilding the country’s infrastructure and positioning the United States to out-compete nations like China. To raise revenue to pay for the plan, the administration is considering the following changes to tax law (note: generally, these changes would go into effect after the 2021 tax year): Continue reading… Continue reading… Continue reading…

© 2014- Stees, Walker & Company, LLP (SWC). All rights reserved.
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