California’s Balanced Budget?

Courtesy of Spidell Publishing Inc. www.caltax.com

The 2009–10 budget revision does not contain any new taxes, but includes tax accelerations that bring money in earlier, so we will likely revisit the fiscal crisis later. Here are the tax changes contained in ABX4 17 and ABX4 18.

Estimated tax payments: Requires individual and corporate estimated tax payments to be made each quarter at 30%, 40%, 0%, and 30% in 2010.

The budget also corrects the adverse impact of the acceleration of estimated tax payments made in 2009 to prevent underpayment penalties from being assessed to taxpayers subject to withholding. Withholding is deemed made in accordance with the estimated tax payment schedule for the applicable tax year. Spidell Publishing brought this issue to the attention of the Franchise Tax Board at the 2008 Taxpayers’ Bill of Rights hearing.

Withholding: For certain payments on or after November 1, 2009, withholding increases:

By 10% on wages;
To 6.6% on supplemental wages; and
To 10.23% on stock options and bonus payments.
Backup withholding conformity: Payors will begin California backup withholding on certain payments beginning January 1, 2010, at a rate of 7%.

Use tax registration: Certain businesses will be required to register with the BOE and report and pay any use tax owed by April 15, for purchases made in the preceding year.

What the budget does not include: Although heavily debated, the 2009–10 budget revision does not include independent contractor withholding, a tax on services, professional license revocation for delinquent taxpayers, or tax agency consolidation.

Find out how all these crazy provisions work when you attend Spidell’s Fall Tax Update. Take one day and be ready to start tax season. Register at a location convenient for you. www.caltax.com

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