California Tax Updates and Conformity Issues

  • California has not conformed to the Federal Tax Cuts and Jobs Act Bill passed in December 2017.  Many California taxpayers who don't itemize under the new federal code may still be able to itemize deductions on their California returns.
  • California SDI rates for 2019 are 1.0% and the maximum wages qualifying increases to $118,371.
  • California estimated tax payments 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 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.
  • California has implemented a REQUIRED Paid Sick Leave Law effective July 1, 2015 which requires all California employers to provide paid sick leave of up to 24 hours per year.  The sick leave is earned at the rate of 1 hour for every 20 hours worked.  Accrual begins on the first day of employment if employed after July 1, 2015 otherwise the accrual begins on July 1, 2015.  Employers must provide employees written notice every payday of the amount of sick time accrued.  There are no exclusions to this new law.

Donald C.Hubbard

6507 Pacific Ave. #342

Stockton, CA 95207

 

Updates

Social Security benefits increased by 2.8% for 2019.  The wage base for 2019 increased to $132,900.  

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© Don Hubbard