Happy New Year! “One Big Beautiful Bill Act” (OBBBA), signed in July 2025, which made many existing tax provisions permanent and introduced several new, temporary deductions and adjustments. Key Take Aways: SALT Cap increased to $40K from $10K, Seniors get an additional deduction of $6,000, First $25K of tip income non-taxable, First $12.5K of overtime non-taxable. MORE TO COME!! Anthony Imbimbo, CPA 619-497-1040

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These questions arise (or the decision is made for you) when you start a new gig. For most workers, the answer is simple; you’re an Employee. The good news about this arrangement (from a tax perspective) is that as an Employee, the Employer manages and administrates your portion of the taxes including Federal and State taxes withheld, and Social Security and Medicare (FICA) withheld (your Employer matches your FICA). At the end of the year you receive a W-2.

The downside is that your Employer controls your schedule and decides what work you have to perform in your job. The other downside is that any business related expenses you incur that are not reimbursed are not tax deductible. This can really hurt money-wise especially if you have a home office, use your car to perform your job, or entertain clients. The remedy? have an understanding before you start your job as to “if” and “how” you’ll be reimbursed for your business expenses. If the employer isn’t offering to reimburse you, then you need to negotiate your salary in order to cover your unreimbursed expenses.

An Independent Contractor on the other hand, may be a better fit for a lot of workers; you have much more flexibility on the type of work you do, the manner you perform this work , and when you want to work. An Independent Contractor (IC) normally receives a 1099 at the end of the year and is responsible for all the tax aspects of work performed, monies received and expenses associated with their work. The great news here is that there are MANY expenses that you can consider as deductions on your tax returns. These deductions include: Office in the Home, Auto and Truck Expenses, Office Supplies, Internet Connection, Business Meals and Entertainment, Health Insurance, Tax Preparation fees, and the list goes on and on.

It’s important to track your expenses throughout the year so you don’t have to scramble when you’re preparing your tax returns.

Here’s the downside of being an IC. First; you’re responsible for all tax aspects. Which means that there is no Federal or State taxes withheld, and there is an extra tax, called “Self Employment Tax” (SE Tax) that is assessed at 15.3% on the net income from these types of earnings! That’s right, folks this tax is over and above income tax. SE Tax was designed to be both the Employee AND the Employer portions of the Social Security and Medicare Tax. So being your own boss means that you wear both hats and have to pay both halves of the SS and Medicare. The positive side of this tax is that it’s assessed on the NET Income from your business. That’s why it’s important to keep track of your expenses.

Need help? Call me anytime, I’m here to serve you ~Anthony Imbimbo, CPA 619-497-1040

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If you are a sole proprietor or landlord, you can take a deduction for using a portion of your home against your business earnings on your tax returns. If you are an employee, sadly, you cannot take a deduction on your Federal tax return; however, California still allows this deduction as a Miscellaneous Itemized Deduction.

The deduction itself is a bit complex. The first part of the deduction is based on the “business use percentage” (office square footage compared to total dwelling square footage). That percentage is applied against the expenses, such as total rent, mortgage interest, real estate taxes, utilities, and insurance.

For a sole proprietor, this deduction saves you about $0.50 tax on every $1.00 of expense.

If you need my help please call me anytime! Anthony W. Imbimbo, CPA 619-497-1040

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The law itself “Talks the Talk” that it will help everyone in the USA but sadly it doesn’t Walk the Walk. These minor changes may cause problems later with tax returns being filed before the laws take effect.

IRS Commissioner Danny Werfel said, “We urge and encourage taxpayers to file when they’re ready.  Don’t wait on Congress. If there’s a change that impacts your return, we will make the change, and we will send you the update whether it’s an additional refund or otherwise without you having to take any steps.” If any passed legislation impacts your tax return you’ve already filed, that means you theoretically have the option of waiting an undetermined amount of time for the IRS to fix the return, or you’ll need to file an amended return.

Our only agreement with the IRS point of view is that if you don’t have dependents to claim on your tax returns, you should file as soon as possible.

If you have dependents, our recommendation is to wait to file your tax returns.

I am here to help you. If you have questions, call me directly, Anthony Imbimbo CPA, at 619-497-1040

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California lawmakers are considering whether to tax short-term rentals to help fund affordable housing initiatives. The proposed California tax would be 15% on the rental price for short-term rentals (i.e., properties rented for less than 30 days). If passed, the tax would take effect in 2025. Lawmakers and proponents believe that this additional tax would help the housing crisis here in California. While opponents to the legislation argue that this additional tax would kill tourism. Short Term Vacation Rental owners will take the brunt of this tax. Owners will likely pass the tax on as another “surcharge” on top of their rental fee. There are no real winners here. The State hasn’t clarified how this tax will ease the housing crisis.

Call us if you need our help, we’re here to serve you!

~Anthony W. Imbimbo, CPA

619-497-1040

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Like LLC’s, S Corporations offer the benefit of limiting the business liability at the entity level giving you protection from law suits.

Also S Corporations are a “pass through” tax entity, meaning that the taxable net income or loss (bottom line) passes from the entity’s tax return to your individual tax return; creating a buffer between your business taxes and your personal taxes.

One of the benefits of having this buffer is that the activity of your business doesn’t come under direct scrutiny on your individual tax return; essentially keeping your audit profile lower than if you reported your activity as a Sole Proprietor on your individual tax return.

Another benefit of having an S Corporation is an S Corp is NOT subject to the 15.3% Self Employment Tax (unlike LLC’s, Partnerships, and Sole Proprietorships)!

As you may already know Self Employment Tax (SE Tax) is a separate tax assessment over and above Income Tax that is similar to the Social Security Tax and Medicare Tax (at 7.65%) that is normally withheld as an employee on a W-2. SE Tax is twice the rate of the 7.65% (15.3%) because you’re both the employee and the employer.

Having a separate entity also has it’s drawbacks. S Corporations need to be licensed/registered with the state where business is performed. California S Corps pay an annual tax of the greater of 1 1/2 % of net income or $800. Taxifornia is one of the few states in the Union that charges tax for having the right to do business in the state. This right to do business tax applies to foreign entities as well so you can’t get around the tax for example if you own a Nevada or Delaware LLC that does business in the state.

Let me help you. Call me today to discuss how we can solve your LLC problem and help lower your audit risk. Anthony W, Imbimbo, CPA, 619-497-1040.

Look for part 3 coming soon describing Partnerships

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Besides the W-2’s and 1099’s that you receive, parents of students (and those that are students) may have tax benefits that they should definitely be taking advantage of. These include tax credits for education which include costs for tuition, and materials (like school supplies and textbooks) For those who graduated student loan interest payments may be deductible.

Other tax credits to consider includes solar panels for your home, energy efficient improvements and a electric vehicle credits. Additionally, if you earned a foreign income and were taxed by another government, you may be eligible for a Foreign Tax Credit. If you worked abroad you should be aware of the Foreign Earned income Exclusion which allows you to exclude foreign income up to a certain amount on your taxes.

We’re here to help you navigate the confusing and make it sensible and stress-free.

If you’d like to know more, please call me at 619-497-1040.

The post Gathering Your Tax Info for 2023 Part 1 appeared first on Anthony W. Imbimbo CPA.

For new and existing business owners the latest trend is to form a Limited Liability Company (LLC). Advertisers and promoters are calling it the magic bullet for protecting yourself and to have a tax advantage. The real news is that business owners in California are not so lucky when it comes to owning an LLC; the reason being is that Taxifornia charges tax for having the right to do business in the state. The tax is assessed on GROSS SALES/REVENUE (not net income) with a minimum tax of $800. This right to do business tax applies to foreign entities as well so you can’t get around the tax for example if you own a Nevada or Delaware LLC that does business in the state.

From a tax standpoint, a Single Member LLC (aka SMLLC), is taxed as a sole proprietorship on your individual tax returns for Federal Tax purposes, putting you on the very height of audit profile. Sole proprietors are one of the highest audited tax entities which the IRS aggressively targets.

So how do you save yourself from these complications as a Sole Proprietor/SMLLC and lower your audit exposure?

A reasonable fix for this conundrum is to have your LLC elect to be taxed and treated as an S Corporation. This election changes the reporting of your tax information so that now your business information is filed on an S Corporation Tax return for Fed and State and the net information flows through to your individual tax return thereby lowering your exposure as a sole proprietor. Taxifornia still has a minimum S Corporation Tax of $800 BUT the tax is based on NET income (as opposed to GROSS income as in an LLC).

Let me help you. Call me today to discuss how we can solve your LLC problem and help lower your audit risk. Anthony W, Imbimbo, CPA, 619-497-1040.

Look for part 2 coming soon describing the different entities you can choose as a business owner.

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The IRS will be accepting 2023 E-File tax returns beginning January 29, 2024. Taxpayers should consider using a tax professional to help them with their 2023 taxes instead of the “Box”. Box Tax Software (Turbo-tax, etc.) may work well for those taxpayers who only have a W-2, but if you have any other tax considerations (i.e. stock/securities transactions, itemized deductions, Airbnb, rentals, side gig/hustle, etc.), your tax picture becomes much more complex and needs to be handled correctly. Making the wrong choice, including/omitting the wrong details causes IRS Audit Exposure. Do you want to trust the Box? Will the Box give you sound advice? Do you think the Box will be able to represent you when you’re sitting face-to-face with the Auditor? Why gamble with the Box? I’m here to help! Call me any time! ~Anthony Imbimbo, CPA 619-497-1040

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Happy New Year!

I wanted to reach out to you to remind you that 2023 year-end tax statements Forms 1099, and Form W-2, are due on or before January 31, 2024 and I am here to help you.

If you had independent contractors/day workers that you paid in excess of $600.00 during 2023, then you are required to issue Form 1099 to that worker on or before January 31, 2024. The IRS is pretty strict about enforcing the issuance of these forms and if the forms are not issued or issued late, then a penalty may be assessed. Also, your deduction to pay these workers (which is not evidenced by a Form 1099) may be disallowed.

I am here to help you get these important documents out to your workers

If you have any questions, comments, or concerns, please feel free to call me at 619-497-1040. Thank you! Anthony

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