Recent California Tax Law Changes

Some tax law changes recently went into effect that that will have an impact on both individuals and businesses in San Jose and throughout the State:

Yet Another Gas Tax Increase
On February 28th the Board of Equalization approved a 3.5 cent gas tax increase, effective July 1, 2013. This brings the gas tax rate to 39.5 cents for 2013-2014. This adjustment should produce revenue at the same rate as if Proposition 30 applied to gas sales. (Proposition 30 resulted in a 0.25% state sales tax increase which does not apply to gas sales.)
Source: Spidell’s California Taxletter, Vol. 35.4, April 1, 2013.
Payroll Tax Reporting Changes

The Employment Development Department has announced two changes:

First, employers must use “business days,” not “banking days” to determine payroll tax deposit due dates.

Second, an employee is considered a rehire if she returns to work for an employer after a separation of at least 60 consecutive days. Employers must report all new and rehired employees to the New Employee Registry within 20 days of starting work.

Source: Spidell’s California Taxletter, Vol. 35.4, April 1, 2013.

For Real Estate Professionals
A real estate professional that spends over half of his or her working hours and at least 750 hours per year materially involved in real estate is exempt from the passive loss rules. These tests are difficult to meet if you also have a job, and the IRS knows it. Since 2007 the IRS has been specifically pulling returns for audit of individuals that claim they are real estate professionals but also have significant W-2 wage income. Be reasonable — records of time spent on real estate must be contemporaneous and believable.
Source: Kiplinger Tax Letter Vol. 88 No. 8, April 12, 2013.

The information appearing in this article does not constitute legal advice or opinion. Such advice and opinion are provided by the firm only upon engagement with respect to specific factual situations. Specific questions relating to this article should be addressed directly to the author.