Archive for CA Tax News
2010 CA Income Tax Rate Schedules Adjusted
Posted by: | CommentsFiling requirement thresholds, the standard deduction, and certain credits were adjusted along with income tax brackets based on the inflation rate of 0.9 percent, as measured by the California CPI for all urban consumers from June 2009 to June 2010. Last year California had a deflation rate that measured 1.5 percent.
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2010 Amounts
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2009 Amounts
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Standard deduction for single or married filing separate taxpayers
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$3,670
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$3,637
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Standard deduction for joint, surviving spouse, or head of household taxpayers
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$7,340
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$7,274
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Personal exemption credit amount for single, separate, and head of household taxpayers
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$99
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$98
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Personal exemption credit amount for joint filers or surviving spouses
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$198
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$196
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Renters Credit is available for single filers with adjusted gross incomes
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$34,722 or less
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$34,412 or less
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Renters Credit is available for joint filers with adjusted gross incomes
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$69,443 or less
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$68,824 or less
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More information about the 2010 tax rates and exemptions and other tax matters is available at ftb.ca.gov.
Same-Sex Marriage in California
Posted by: | CommentsUPDATE … August 16, 2010
Federal Court delays August 18, 2010 date for same-sex marriages in CA.
August 12, 2010
The Northern United States District Court of California lifted the temporary ban on same-sex marriages. This means that same-sex marriages will be legal in California beginning August 18, 2010, while the ruling that Proposition 8 is unconstitutional is appealed to the higher courts.
For income tax purposes, California treated all same-sex married couples who were married prior to the ban the same as registered domestic partners (RDPs). It appears that the same rules will apply to all same-sex couples who marry. This means that community property rules will apply, and they will file as married for California purposes, even though they must file as single for federal purposes.
Taxpayers with AGI of $1 Mil or more …
Posted by: | CommentsThe CA Franchise Tax Board (FTB) announced that they have erroneously assessed underpayment penalties for some taxpayers with AGI of at least $1 million who did not pay 90% of their tax during 2009, a new requirement effective for years beginning on or after January 1, 2009.
While these taxpayers may not use the prior-year safe harbor, they are not subject to the underpayment penalty if, in the prior year, the taxpayer: (1) had a liability of $500 or less ($250 for married filing separately); and (2) made all payments in the prior year through withholding. (R&TC §19136(c)(2))
If the penalty should not have been assessed because taxpayer meets these two tests, taxpayer should contact their tax preparer or call the FTB Tax Practitioners’ Hotline at (916) 845-7057 to request abatement.
Registered Domestic Partners’ Income
Posted by: | CommentsRegistered Domestic Partners’ Income … Is Community Property
A California registered domestic partner must report one-half of the community income, whether received in the form of compensation for personal services or income from property, on his or her federal income tax return.
Example: Bob & Joe are registered domestic partners in California. Bob’s wages for the year are $80,000. Joe’s wages for the year are $60,000. Bob and Joe are each required to file Federal income tax returns and each must report half of the total of the wages, i.e. $70,000 [(80,000 + 60,000) X 50% = 70,000].
Source: Office of Chief Counsel, Internal Revenue Service.
Chief Counsel Advise (CCA) Memorandum Number: 201021050
Release Date: 5/28/2010
CA – Reserving a New Home Credit Before Escrow Closes.
Posted by: | CommentsTaxpayers who qualify for the New Home Credit may, but are not required to, request a reservation prior to the close of escrow. Reservations will become important as we near the $100 million cap for homes that may not close escrow before the cap is reached, as a reservation will “hold the taxpayer’s place in line” until 2 weeks after escrow closes. Taxpayers may only request a reservation if they have entered into an enforceable contract on or after May 1, 2010. Taxpayers who only qualify for the First-Time Buyer Credit may not request a reservation.
Requesting or receiving a reservation does not guarantee the credit. An application must still be completed and faxed to FTB along with the final settlement statement within two weeks after the close of escrow. If a buyer requests a reservation and the purchase is cancelled, the buyer must notify FTB. (Updated 04/28/10)
A first-time buyer is any individual (and the individuals spouse/RDP, if married on the date of purchase) who did not have an ownership interest in a principal residence, either in or out of California, during the preceding 3 year period ending on the date of the purchase of the qualified principal residence.
Source: State of California Franchise Tax Board / 2010 Tax Credit for New Home/ First Time Buyer article
Online Buyers & Sellers – Info
Posted by: | CommentsThe California Franchise Tax Board (FTB) and the California State Board of Equalization (BOE), urge online buyers and sellers to be informed about their tax obligations. The Internet is a dynamic and convenient technology that many businesses use to sell their products and that shoppers use to find great deals.
However, one essential fact is often overlooked — there is no general tax exemption for sales made over the Internet.
FTB and BOE are jointly contacting Internet auction houses to provide them with educational material to help their customers meet their state tax responsibilities. A new publication has been created designed to assist online buyers and sellers to understand their tax responsibilities, FTB 3730, Online Buying or Selling — Know Your Tax Obligation. ……….. Read More→
CA – New Home Tax Credits Available
Posted by: | CommentsThe 2010 New Home/First Time Buyer tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. Additionally, these tax credits are available for taxpayers who purchase a qualified principal residence on or after December 31, 2010, and before August 1, 2011, pursuant to an enforceable purchase agreement executed on or before December 31, 2010. The purchase date is defined as the date escrow closes. …… Read More→
California Recognizes Out-of-State Same-Sex Marriages
Posted by: | CommentsOn October 11, 2009, the Governor signed Senate Bill 54, which provides that a marriage between two persons who have entered into a same-sex marriage outside the State of California prior to November 5, 2008, that was valid by the laws of the jurisdiction in which the marriage was contracted, is valid in California. The bill also provides that … Read More→
CA Dependent Exemption Reduced
Posted by: | CommentsCalifornia has reduced the exemption amount for dependents for Tax Year 2009.
While the exemption amounts for you and your spouse (if applicable) and the additional exemption amount for blind and/or seniors has only been reduced by $1.00, the dependent exemption amount, i.e., for children, has been reduced from $309 on your 2008 Tax Year return to $98 for your 2009 Tax Year return.
If you have one or more dependents, this change to the dependent exemption amount WILL (dollar for dollar) either reduce your expected refund or increase your balance due for tax year 2009.
CA Military Spouses Residency Relief Act
Posted by: | CommentsThe Military Spouses Residency Relief Act (MSRRA) was signed into law on November 11, 2009. For taxable years beginning on or after January 1, 2009, a servicemember’s spouse is considered a nonresident for tax purposes if the servicemember and spouse have the same legal residence or domicile outside of California and the spouse is in California solely to be with the servicemember who is serving in compliance with military orders. In addition …. Read More→
CA Mandatory e-pay Penalty Update
Posted by: | CommentsWhen you are required to make electronic payments but pay by other means, CA can assess a penalty equal to one percent of the amount paid, unless your failure to pay electronically was for reasonable cause and not willful neglect.
Effective January 1, 2010: Since passage of the Mandatory e-pay law for Individuals, compliance by taxpayers and their representatives has steadily increased. Therefore, in 2010, CA will again not assess the Mandatory e-pay Penalty. They will continue to monitor compliance levels to determine the appropriate time to begin implementation of the penalty provision.
For more information about the e-pay law and making your tax payment, go to ftb.ca.gov and search for Mandatory e-pay.
Source: CA FTB Tax News January 2010
CA Personal Tax Withholding
Posted by: | Comments- California personal tax withholding tables updated again, effective November 1, 2009 …
California personal tax withholding tables have been updated a second time this year by the Employment Development Department according to the California State Budget.
The increase of 10% affects all wage brackets for 2009 and 2010. For copies of the revised tables, please visit website: www.edd.ca.gov/Payroll_Taxes/Rates_and_Withholding.htm.
This change is scheduled to be implemented November 1, 2009. For additional information, please visit the website:
www.edd.ca.gov/Payroll_Taxes/Forms_and_Publications.htm.
CA Dependent Exemption
Posted by: | Comments- CA Dependent Exemption for 2009 and 2010 …
“The Dependent credit is reduced to the same amount as the personal exemption credit (for 2009 and 2010 taxable years.)”