state income - Linkenheimer LLP CPAs & Advisors

Factor in Taxes if You’re Relocating to Another State in Retirement

Are you considering a move to another state when you retire? Perhaps you want to relocate to an area where your loved ones live or where the weather is more pleasant. But while you’re thinking about how many square feet you’ll need in a retirement home, don’t forget to factor in state and local taxes. Establishing residency for state tax purposes may be more complicated than it initially appears to be.

What are all applicable taxes?

It may seem like a good option to simply move to a state with no personal income tax. But, to make a good decision, you must consider all taxes that can potentially apply to a state resident. In addition to income taxes, these may include property taxes, sales taxes and estate taxes.

If the state you’re considering has an income tax, look at what types of income it taxes. Some states, for example, don’t tax wages but do tax interest and dividends. And some states offer tax breaks for pension payments, retirement plan distributions and Social Security payments.

Is there a state estate tax?

The federal estate tax currently doesn’t apply to many people. For 2021, the federal estate tax exemption is […]

By Linkenheimer LLP|2021-11-02T20:33:05+00:00November 2nd, 2021|estate, estate tax, moving expenses, retirement, state income|0 Comments

California Tax Updates for 10/2

Post 1:

California expands its professional exemption. Effective Sept. 9, 2020, this exemption is expanded to include employees who provide instruction for a course or laboratory at colleges and universities in CA. To qualify, an individual must satisfy the duties test and salaries test. Employees must earn the monthly equivalent to no less than twice the state minimum wage in which the employee is employed for at least 40 hours per week, or a minimum salary in 2020 of $117 per classroom hour. In 2021, this hourly rate rises to $126 and in 2022 to $135. Beginning in 2023 the rate will be adjusted based on the state minimum wage. Contact your Linkenheimer CPA with questions.

Post 2:

The California Franchise Tax Board (FTB) is hoping to increase the number of Californians who receive the CA earned income tax credit. The FTB is required to analyze and develop a plan to increase the number of claims of the CA earned income tax credit, […]

By Linkenheimer LLP|2020-10-02T17:27:26+00:00October 2nd, 2020|ca, CA tax, california, credit, ftb, income tax, state income|0 Comments

State and Local Tax Deduction Limited

Under pre-Act law, taxpayers could deduct from their taxable income as an itemized deduction several types of taxes paid at the state and local level, including real and personal property taxes, income taxes, and/or sales taxes.

New law. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, subject to the exception described below, State, local, and foreign property taxes, and State and local sales taxes, are deductible only when paid or accrued in carrying on a trade or business or an activity described in Code Sec. 212 (generally, for the production of income). State and local income, war profits, and excess profits are not allowable as a deduction.

However, a taxpayer may claim an itemized deduction of up to $10,000 ($5,000 for a married taxpayer filing a separate return) for the aggregate of (i) State and local property taxes not paid or accrued in carrying on a trade or business or activity described in Code Sec. 212; and (ii) State and local income, war profits, and excess profits taxes (or sales taxes in lieu of income, etc. taxes) paid or accrued in the tax year. Foreign real property taxes may not be deducted. (Code Sec. 164(b)(6), as amended by Act Sec. […]

By Linkenheimer LLP|2020-09-03T20:04:47+00:00January 9th, 2018|CA tax, income tax, New Tax Laws, property tax, state income|0 Comments

Californians can expect Head of Household Audit Letters

The California Franchise Tax Board (FTB) has mailed more than 120,000 audit letters to taxpayers to verify their head of household (HOH) filing status on their 2011 state income tax returns. Each year, the FTB reviews the tax returns of taxpayers who claim the HOH filing status because the qualifications are commonly misunderstood. Taxpayers can generally claim the HOH filing status if they are unmarried, have cared for a qualified person for more than half the year, and paid more than half the cost of maintaining their home.

Taxpayers who do not qualify will have their tax reassessed using either the single or married-filing-separate filing status. Nearly 28,000 California taxpayers who claimed the HOH status last year did not meet its requirements.

The FTB encourages taxpayers who receive an HOH audit letter to respond promptly by completing the enclosed questionnaire. Failure to respond could result in a tax assessment and penalty.

News Release, California Franchise Tax. Board, August 8, 2012

By Linkenheimer LLP|2020-09-03T20:06:02+00:00August 13th, 2012|audit, CPA, head of household, HOH, letter, Linkenheimer, Santa Rosa, state income, taxpayers california franchise tax board|0 Comments