Tax Planning Archives

What That One Big, Beautiful Bill Act May Mean for You or Your Business

By Office Staff|2025-07-10T10:41:38-07:00July 1, 2025|Categories: Legislation, Tax Credits|Tags: Above-the-Line Deductions, Bonus Depreciation, Legislative Updates, OBBBA, One Big Beautiful Bill, Tax Credit, Tax Planning|0 Comments

Depending on how you voted in 2024 or which media outlets you follow, you might think the One Big, Beautiful Bill Act (OBBBA) is either a historic win or a major letdown. Since clients have been asking for our take, we want to share what we know and believe about the bill.

Passed by the U.S. House of Representatives on May 22, 2025, and passed this morning by the United States Senate, the bill includes 300-plus provisions, including one that seeks to extend the provisions of the 2017 Tax Cuts and Jobs Act, which are set to expire at the end of 2025. But there’s much more to it than that.

While changes are expected as the legislation moves back to the House of Representatives for another vote, many provisions will likely survive the legislative process. This summary covers the main individual and business tax provisions broken down into the following four sections:

New above-the-line deductions (tips, overtime pay, and vehicle loan interest)
Business depreciation and expensing provisions (to encourage new investments in production property and equipment)
Business interest expense limitation (to prevent excessive interest deductions that would reduce a business’s taxable income too aggressively)
Clean energy credit rollbacks (to reduce subsidies for clean energy technologies)

New Above-the-Line Deductions

President Trump’s campaign promises are reflected in three above-the-line deductions proposed in the OBBBA. (An above-the-line deduction is one that reduces the adjusted gross income [AGI] used to calculate how much federal income tax is owed. It does not affect the amount of Social Security and Medicare tax owed.)

Here are the three new above-the-line deductions proposed in the OBBBA:

A tax deduction for tip income (“no tax on tips”)
A tax deduction for overtime pay (“no tax on overtime”)
A tax deduction for interest paid on loans used to buy certain vehicles manufactured in the United States

Tax Deduction for Tip Income

The proposed “no tax on tips” deduction is for certain tips reported on W-2s and other tax forms. With one out of every 30 workers in the U.S. depending on tips to make ends meet, a tax deduction for tip income is an essential need for some.

Here are the requirements to qualify: Continue reading… Continue reading… Continue reading…

Last-Minute Moves for Small Businesses to Reduce 2024 Federal Income Tax

By Office Staff|2024-11-06T11:53:01-08:00November 6, 2024|Categories: Business Taxes|Tags: Individual Retirement Account, Qualified Business Income Deduction, Tax Planning, Year-end Tax Planning|1 Comment

As the clock ticks down toward the end of the 2024 tax year, tax-saving opportunities are about to disappear. If you’re a business owner or entrepreneur, you still have time to implement a few tax-saving strategies, but you’d better hurry — time is running out.

In this two-part series, we share tax-saving strategies you can implement prior to the end of the tax year to reduce your tax obligation for 2024. In Part 1, we focused on strategies for individual taxpayers. In Part 2 of this series, we shift our focus to tax-saving strategies for business owners, starting with tax-favored retirement plans.

Contribute to a Tax-Favored Retirement Plan

By contributing to a tax-favored retirement plan, you can reduce your business’s taxable income and allow your contributions to grow tax-free until you withdraw the money. As a business owner, you have several options:

Contribute to an Individual Retirement Account (IRA). This is the simplest option, but it also has the lowest cap at $7,000 for 2024. If you’re over the age of 50, you can make an additional $1,000 catch-up contribution.
Create a Simplified Employee Pension (SEP) plan. With a SEP, you can contribute up to 20 percent of your net self-employment income for 2024. If you are employed by your own corporation, you can contribute up to 25 percent of your salary. The maximum contribution in either case is $69,000.
Establish a 401(k) plan. A 401(k) plan offers the same benefits as a SEP plan but also allows for matching employer contributions, meaning you can move more pre-tax money into the plan.
Use a SIMPLE IRA. SIMPLE stands for Savings Incentive Match Plan for Employees. A SIMPLE IRA (Individual Retirement Account) can be a good choice if your business income is modest.

Contact us for information about your options for 2024 and to explore long-term solutions that may reduce your tax bill and accelerate the rate at which you build wealth in the future.

Remember: If your business has employees, you may need to cover them too.

Participating in a Tax Projection Meeting in November or December can help you estimate your 2024 tax liability and adjust your withholding or calculate an estimated tax payment to minimize any potential underpayment penalty.

To schedule a year-end Tax Projection Meeting with SWC Founding Partner Marni Walker, please call our office at (858) 487-4580.

To schedule with Founding Partner Laura Stees, visit www.SWC.cpa/Contact, click “Schedule an Appointment,” then select “Tax Projection” to choose a convenient day and time.

Maximize your Section 179 Deductions

If you need equipment or software for your business, you can write off the cost up to the Section 179 deduction limit of $1.22 million for 2024. Most types of personal property and off-the-shelf software used for business are eligible for Section 179 deductions.

Section 179 deductions also can be claimed for the following: Continue reading… Continue reading… Continue reading…

Tax Planning: It’s Not Just for the Super Wealthy

By Laura Stees, CPA|2024-10-30T12:59:49-07:00October 30, 2024|Categories: Tax Planning|Tags: Tax Deductions, Tax Planning|1 Comment

It’s no secret that some of the wealthiest people in the United States pay the least income tax. According to some reports, billionaires can even get their income tax down to zero, and it’s entirely legal.

In some instances, they build their wealth through ownership of shares in one or more companies and then borrow against that wealth to cover their expenses. And because they don’t realize any gains from selling shares, they’re not earning income subject to tax. In fact, they can even claim the interest they pay on their loans as a deduction against any income they earn!

Here at SWC, that’s what we call savvy tax planning. Don’t you wish you could do that?

Well, you may not be wealthy enough or low-income enough to pay zero income tax, but if you’re somewhere in between, strategies are available for reducing your tax bill and building your wealth at an accelerated rate. Tax-saving strategies include maximizing tax deductions and credits and contributing to tax-deferred retirement accounts. And you don’t have to be super-rich to take advantage of them. You just need to engage in tax planning.

What Is Tax Planning?

Tax planning is the process of analyzing your financial situation to minimize tax liabilities. It involves careful consideration of income, expenses, investments, deductions, credits, and future opportunities to take advantage of all available tax laws and regulations.

Suffice it to say, tax planning plays a crucial role in building wealth. By investing some or all of the money you save on taxes, you can provide yourself with additional tax-savings options while your investments grow in value.

Understanding Tax Planning: Tax planning is the exercise of reviewing the amount of tax you pay in an effort to maximize your after-tax income. To do this properly, it is important to understand myriad federal and state rules and regulations related to deductions, credits, income deferral, and tax minimization strategies where possible.

When you engage with a tax planning firm like SWC, the process is designed to help you or your business pay the least amount of tax legally possible, based on current tax law and regulations as they relate to your current and future financial goals and objectives. Legal tax strategies encompass leveraging retirement planning, estate planning, investment income, investment vehicles, and the optimization of your business operations if you own a business or work in an entrepreneurial capacity.

Here are some of the ways tax planning can help you build wealth: Continue reading… Continue reading… Continue reading…

The Top 10 Reasons Why Business Owners Need to Meet With a CPA This Summer

By Office Staff|2024-06-13T12:12:39-07:00June 13, 2024|Categories: Business Taxes|Tags: Business Advice, Depreciation, Employing Family Members, Qualified Business Income, Qualified Small Business Stock, Tax Planning|0 Comments

A few days ago here on the SWC blog, we shared why it’s important for individual taxpayers to meet with their CPA over the summer. It basically boils down to being prepared. No one wants to learn in the first quarter of 2025 that their state or federal tax liability could have been dramatically reduced or altogether eliminated had they just met with their CPA for one hour in June, July, or August.

As a business owner, the same logic applies. Below are the top 10 reasons why you as a business owner, entrepreneur, or an investor with an ownership stake in a business should schedule a mid-year meeting with your CPA this summer.

Take Advantage of Depreciation Tax Breaks: Current tax laws offer generous depreciation deductions for qualifying assets. By discussing your plans with us, we can help you maximize your Section 179 deductions and first-year bonus depreciation, potentially saving you significant amounts on your tax return.

Time Business Income and Deductions: Strategically timing your business income and deductions can lead to substantial tax savings. Whether it’s deferring income or accelerating expenses, we’ll help you make the right moves to align with your financial goals.

Maximize the Qualified Business Income (QBI) Deduction: The QBI deduction can be a significant tax saver for owners of pass-through entities. We’ll ensure you understand the complexities and limitations of this deduction, helping you plan to maximize your benefits.

Continue reading… Continue reading… Continue reading…

Want to Reduce Your Income Tax? Start Planning Now!

By Office Staff|2022-06-02T14:06:42-07:00June 2, 2022|Categories: Taxes|Tags: Bitcoin, Calculating Taxes, Capital Gains, Capital Losses, Cryptocurrency, Estimated Payments, Mid-Year Meeting, Net Investment Income Tax, Reverse Mortgage, Tax Planning, Tax Withholding, Virtual Currency|0 Comments

You probably just filed your 2021 tax return a month ago or so, and you’re ready to put taxes at the back of your mind for at least a few months. This may not be your best thinking because, if you want to pay less in 2022, now’s the time to start planning.

What you do from now until December 31 of this year, can have a significant impact on how much income tax you’ll owe, or the size of the refund you can expect to receive, next year. That’s why here at SWC, we’re encouraging our clients to schedule a Mid-Year Tax Planning Meeting as soon as possible.

In fact, tax planning is becoming increasingly important for two reasons:

First, thanks to inflation and other economic pressures, increases in income aren’t likely to keep pace with inflation. Saving on taxes may help alleviate some of that pain.
Second, if any pieces of current administration’s tax plan are implemented, tax rates for both individual and corporate taxpayers could increase. Having a tax plan in place to account for these potential increases and maximize the deductions and credits for which you qualify, may help to counter some of those increases.

As you prepare for your Mid-Year Meeting with us, we encourage you to start thinking about the various steps you can take now to avoid any nasty surprises next year, including:

Consider adjusting your tax withholding or estimated payments
Get a grip on the timing of investment gains and losses
Take advantage of lower tax rates on investment income
Check your deduction strategy
Be prepared for issues related to virtual currency
Consider if a reverse mortgage is right for you

In this post, we’re going to cover all of the above and more. First up, tax withholding and estimated payments.

Review Your Tax Withholding or Estimated Payments

The U.S. has a pay-as-you-go tax system, meaning that citizens pay taxes as they earn money. Here’s what that means: Continue reading… Continue reading… Continue reading…

Small Business Guide to Reducing Your Tax Burden Legally — Part 1: Tax Planning

By Office Staff|2020-10-08T20:54:48-07:00July 16, 2020|Categories: Taxes|Tags: 2020 Tax Brackets, Adjustments to Income, Itemized Deductions, Small Business Guide to Legally Reducing Your Tax Burden, Tax Credits, Tax Planning, Tax System|0 Comments

Welcome to Part 1 of our 12-part series on how to reduce your tax burden legally. Here in Part 1, we address the first and most important step — tax planning. As the old saying goes, “Failing to plan is planning to fail,” and this is especially true when you are trying to reduce your tax burden legally.

Consider for a moment the first time you drove a car? If you were doing it right, you spent far more time looking where you were going than where you came from. You don’t drive forward staring in the rearview mirror. Unfortunately, that’s how most tax “specialists” are geared. They spend so much time looking back at last year’s finances that they rarely advise their clients to look forward.

They can tell you all about what you earned and spent last year and how much you owe in taxes as a result, but they rarely think to tell you what you should do today to save on taxes next year. Even the few who do tell their clients what to do rarely tell them when or how to do it.

Taking a proactive, forward-looking approach with tax planning can simplify next year’s taxes and save you a considerable amount of money, especially if you’re a small-business owner. Tax planning provides small-business owners with two valuable benefits:

Benefit No. 1: First, tax planning is a key component in your financial protection. As a small to medium size business owner, you have two ways to increase your net profits: financial offense (earning more) and financial defense (spending less). For most small-business owners, taxes are the biggest expense, so a big part of playing financial defense involves reducing the tax burden. And you do that through savvy tax planning.

Benefit No. 2: Second, participating in tax planning almost always ensures results. You can spend a huge amount of time, effort, and money promoting your business with no guarantee of achieving positive results. In contrast, every tax-savings initiative you implement guarantees a return on your investment. But those guaranteed results start with planning. For example, you can’t deduct medical expenses paid out of a medical expense reimbursement plan if you haven’t set up such a plan ahead of time.

To get this series started, indulge us for a moment as we cover how the tax system works here in the United States of America.

Understanding How the Tax System Works

A general knowledge about how the tax system works lays the foundation for understanding specific tax-savings approaches we present later on in this post. Here’s a graphic demonstrating how the tax system works: Continue reading… Continue reading… Continue reading…

Understanding How Shifting Income May Reduce Taxes

By Laura Stees, CPA|2020-03-12T15:41:18-07:00March 12, 2020|Categories: Taxes|Tags: Business Income, Cutting Taxes, Shifting Income, Tax Planning|0 Comments

In our previous post — Four Proven Ways to Cut Your Taxes — we highlighted four areas we focus on when seeking to reduce the amount of taxes our clients owe state or federal taxing authorities: shifting, timing, code, and product. In this post, we take a deeper dive into the technique known as shifting, which involves transferring income or assets from a high-tax-bracket person or entity to a person or entity subject to low or zero taxes.

For example, suppose a portion of your business income is taxed at 37 percent, which is currently the highest income tax rate in the U.S. You hire a teenage son and daughter to work for you over the summer and pay each of them $12,400. As a result, you save $24,800 x 0.35 = $8,680 in federal income tax plus any state taxes as well as potentially any amount you would have been required to pay in self-employment tax on that $24,800. Assuming neither child earns more than $12,400, because of the current tax code, they pay nothing in federal taxes. This is a great way to shift business income you don’t need for yourself to your children.

This example illustrates just one of several shifting techniques that can be used to reduce one’s tax burden. Several techniques are available that can be broken down into the following two areas:

Business income: In business, the primary objective of shifting is to reduce personal income tax and, in many cases, pay less in self-employment taxes (Social Security and Medicare).
Estate planning: In the context of estate planning the objective is to reduce individual income taxes levied on investment income and capital gains while ultimately reducing or eliminating estate taxes. In this post, we touch lightly on shifting the context of estate planning, while in a future post provide more in-depth coverage of this topic.

Income Shifting in Business

If you own a business, you have three ways to use income shifting to reduce your tax bill: Continue reading… Continue reading… Continue reading…

Four Areas for Cutting Taxes, Growing Net Worth, and Achieving Peace of Mind

By Laura Stees, CPA|2020-03-06T12:43:13-08:00March 6, 2020|Categories: Financial Planning|Tags: Business Expenses, Business Income, Cutting Taxes, Exit Planning, Investments, Tax Planning|0 Comments

People are funny. We tend to plan more for a vacation than we do for our own and our family’s financial future. Planning for vacation involves choosing a destination; deciding how to get there (means of travel, route, stops along the way); deciding how long to stay, where, and what to do while on vacation, and more.

Financial planning and even a subset of that — tax planning — is more involved and complex, yet we invest less time and effort engaging in it. As a result, many of us pay more than our fair share in taxes, leaving us with less of our annual earnings to enjoy and to invest in our own and our family’s future security, comfort, enjoyment, and self-fulfillment.

One way to simplify the process of tax and financial planning is to break down the task into distinct areas of your life where you can cut taxes, grow your net worth, and achieve peace of mind. This post steps you through that process.

Area 1: Family, Home, and Job

Age-old wisdom advises that “charity begins at home,” meaning that before we can help others, we need to build a firm foundation for our own financial health. It also means taking care of those closest to us first — our family members and friends.

Tax-savings and financial planning strategies should also begin at home with family, home, and job. Areas of focus should include the following: Continue reading… Continue reading… Continue reading…