CA tax - Linkenheimer LLP CPAs & Advisors

California Governor Signs Two Major Bills: SB 113 and SB 114

Today, California Governor Gavin Newsom signed SB 113, which expands the passthrough entity elective tax benefits by:

Repealing the tentative minimum tax limitation on the Passthrough Entity Elective Tax Credit;
Allowing partnerships/S corporations/LLCs with owners that are partnerships to make the election (although the tax can’t be paid on behalf of the partnership owner);
Allowing SMLLCs that are passthrough entity owners to claim the Passthrough Entity Elective Tax Credit (although SMLLCs are still prohibited from making the election themselves); and
Changing the credit ordering rules related to the Passthrough Entity Elective Tax Credit to increase the benefit for taxpayers that claim the Other State Tax Credit (beginning with the 2022 tax year).

Except as noted, these changes will apply to the 2021 tax year. Yesterday, we posted more info on SB 113, which you can read here.

SB 113 also:

Fully conforms to the federal exclusion of Restaurant Revitalization Grants, retroactive to the 2020 tax year;
Partially conforms to the federal exclusion of Shuttered Venue Operator Grants, retroactive to the beginning of the 2019 tax year; and
Repeals the $5 million business credit limitation and NOL suspension for higher […]

By Linkenheimer LLP|2022-02-09T20:03:46+00:00February 9th, 2022|ca, CA tax, california, New Tax Laws|0 Comments

California Tax Law Changes Await Governor’s Signature

Governor Newsom is expected to sign SB 113 soon, which contains several tax-related changes that impact 2021 tax returns and the current filing season.

Expansion of the Pass-through Entity (PTE) Tax for Additional Relief from State and Local Tax (SALT) Deduction Limits In 2021, California established an elective PTE tax framework to allow certain California taxpayers to pay their California personal income tax in a way that provides relief from the current $10,000 federal limit on individual SALT deductions. While implementing the new framework, limitations were identified that would prevent taxpayers from realizing the full intended benefit of the PTE tax and subsequent credit. SB 113 address some of these issues:

For taxable years on or after Jan. 1, 2021:
- Clarification that a taxpayer can apply the full PTE credit against their California tax liability as originally intended without limitation due to tentative minimum tax.
- Expansion of eligible taxpayers to include tiered partnerships and those that own their share of a business through a disregarded entity, such as a single-member LLC.
- Clarify that PTE tax provisions can apply to guaranteed payments as part of the distributive share of net income from an entity.

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By Linkenheimer LLP|2022-02-08T23:50:01+00:00February 8th, 2022|CA tax, california, New Tax Laws, ppp|0 Comments

California Tax Updates for 1/7

Update 1:

Employers in California should know the state Employment Development Dept. released CA’s 2022 interest rates on delinquent payroll taxes. For the period of Jan. 1, 2022, through June 30, 2022, the interest rate will be 3% compounded daily (unchanged from 2021). This is the interest rate charged on all overdue taxes, including: Unemployment Insurance; Employment Training Tax; State Disability Insurance and Personal Income Tax withholding. This rate is subject to semiannual adjustment in January and June, based on short-term federal rates. CA’s Unemployment Insurance Code doesn’t allow the interest to be canceled or waived. Contact us with questions or visit this link: https://bit.ly/3dZFFXS

Update 2:

California’s statewide minimum wage rate will rise in 2022. The CA Dept. of Industrial Relations has announced that the statewide hourly minimum wage rate will rise to $15.00 for large employers (with at least 26 employees) and to $14.00 for smaller employers. In 2016, CA law required the state […]

By Linkenheimer LLP|2022-01-07T20:29:29+00:00January 7th, 2022|CA tax|0 Comments

California Tax Updates for 10/28

Update 1:

Required supplemental paid sick leave (SPSL) related to COVID-19 expired in California on Sept. 30, 2021. Specifically, that leave was required of employers with at least 26 employees. However, a number of CA localities continue to require some form of SPSL. They include Long Beach (for employers with at least 500 employees); Los Angeles city and county (also for employers with 500 or more employees); and Oakland (for employers of 50 or more workers). Sonoma County has a pending extension to a prior law.

Update 2:

California’s 529 college savings plan conforms to recent changes in the federal tax law. Those changes expanded allowable withdrawals from 529 plans to include expenses associated with participation in a registered apprenticeship program and student loan repayment, for taxable years beginning Jan. 1, 2021 or after. Also, for the same period, CA legislation disallows the deduction available on qualified education loan interest to the extent such interest is paid as a tax-free distribution from a […]

By Linkenheimer LLP|2021-10-28T17:25:37+00:00October 28th, 2021|ca, CA tax, california, college tax credit|0 Comments

California Tax Updates for 10/6

Update 1:

Recent legislation in California helps warehouse employees. The legislation prevents warehouse employers from terminating workers for failing to meet quotas that interfere with rest breaks, effective Jan. 1, 2021. Specific employers must give each nonexempt employee working in a warehouse distribution center a written description of each quota to which the employee is subject. Quotas must include the number of tasks to be done or materials to be produced or handled, the timeframe for completion, and possible consequences if quotas aren’t met. Employees won’t be required to meet a quota that prevents compliance with meal or rest periods, use of bathroom facilities, or health and safety laws.

Update 2:

California Governor Gavin Newsom is considering several payroll-related bills. Among them are a bill that would require food delivery platforms to pay any gratuities in full to the person delivering the product. Any tip paid on a pickup order would be paid in full to the food facility. Also being considered is […]

By Linkenheimer LLP|2021-10-06T22:45:57+00:00October 6th, 2021|CA tax, california|0 Comments