California Tax Updates and Conformity Issues

  • California SDI rates for 2012 are 1.0% but the maximum wages qualifying remains at $95,585 making the maximum SDI withholding $955.85.
  • California estimated tax payments for 2011 are now front loaded.  Estimated tax payments for individuals now require 30% for the first installment due April 15th, 40% for the second estimate installment due June 15th, no estimate installment is due on September 15th and 30% for the fourth estimate installment due January 15th.
  • California has implemented new requirements for LLC's for 2009 and beyond.  LLC's must now pay the estimate by the 15th of the sixth month of the year, meaning that a calendar year LLC must estimate and pay the full fee for 2009 by June 15, 2009.
  • California recently conformed mortgage forgiveness relief rules on foreclosures.  There are limitations on the amount of allowed to be forgiven without resulting in taxable income that are less than the amounts allowed under current federal law.  The California limits debt relief on a qualified residence to $800,000 for married, filing jointly and $400,000 for single taxpayers.
  • The California teacher retention credit is longer allowed.
  • California requires withholding of 3 1/3% on sales of real estate other than the sale of a personal residence.
  • California now offers web payment of taxes and in certain cases for high income taxpayers now requires electronic tax payments.
  • California has not conformed to the federal rules allowing the deduction of Health Savings Accounts, therefore, HSA's are not currently deductible in California.  Therefore, on California returns, the Federal HSA deductions are added back to income.  Income earned on HSA's in California is taxable income.
  • California has conformed to the new limits on IRA's and Roth IRA's
  • The IRS has ruled that the California Paid Family Leave insurance program is taxable income to the recipients on their federal income tax returns.  These benefits are not taxable for California.
  • Net operating loss carrybacks are now suspended until 2013.
  • The California Standard deduction for 2011 is $3,769 for single and $7,538 for married filing jointly.  The personal exemption credit for 2011 is $102 for single and $204 for married.  The dependent exemption credit for 2011 is $315.