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Update on California’s Tax Law Changes for 2009

For those of you that will need to file a California Tax return for 2009 I thought I would go over some of the more important California tax law changes that might have some impact on your tax return.  Below are listed just some of the changes that I think may have the most impact:

Increase in Tax Rates:  For 2009 and 2010 that tax rates have been increased by .25 percent (one quarter of one percent).

Exemption Credits:  The dependent exemption credit has been decreased from $309 to $98 per dependent.

Estimated Tax Percentages:  For those of you that make estimated tax payments to California (both personal and corporate) the percentages have changed again effective January 1, 2010.  The new percentages are as follows: 30% first quarter, 40% second quarter, 0% (yes that’s a zero) third quarter, and 30% fourth quarter.

Military Spouses Residency Relief:  Starting January 1, 2009 federal law provided that civilian spouses of military personal who reside in California (or any state for that matter) only because of military orders do not become California residents and thus are exempt from California State income tax on their income.  Some additional rules apply so make sure you fully understand all of the conditions.

Small Business Jobs Tax Credit:  For small businesses that hired new employees for 2009 a Jobs Tax Credit is available.  This credit provides a $3,000 credit for each additional full-time employee hired by a qualified small business.  To get this credit you must file quickly as it is limited to the first $400 million in credits applied for.

Net Operating Losses:  If your business income is over $500,000 then losses from prior years are suspended for 2009 and cannot be used.  Loss carry forwards have been extended from 10 years to 20 and starting in 2011 taxpayers can carryback losses two years as is typical with federal returns.

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This entry was posted by Richard Rogers, EA on Wednesday, January 20th, 2010 at 9:24 am and is filed under Credits, For Businesses, For Individuals, NOL, NOL, Tax Rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

About The Author

Richard Rogers, EA
Richard Rogers has been working as a tax professional for over six years and has been working with small businesses for over 20. As an enrolled agent, he routinely represents the interests of taxpayers before the Internal Revenue Service and Franchise Tax Board. He works in a tax practice that focuses on the special needs of individuals and small businesses. Richard currently is employed in a private tax practice where he helps people and businesses resolve their tax issues, minimize their tax liability, and plan for their financial future. While Richard does most types of tax returns including individual, he specializes in small business returns including C-Corporation, S-Corporation, Partnership and LLC returns. Richard also has a strong background in accounting, management, and information systems as he worked as a CFO and CIO for a software development company for 12 years. Richard earned a bachelor’s degree in Business Administration from San Diego State University with in emphasis in Information Systems. He also taught business courses at the university. He currently stays abreast of tax law changes through continuing education, seminars, and research via the Internet.

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2 Responsesto “Update on California’s Tax Law Changes for 2009”

  1. Cordelia Angelou says:
    May 21, 2010 at 8:29 am

    hey,Fantastic blogging dude! i am just Fed up with using RSS feeds and do you use twitter?so i can follow you there:D.
    PS:Do you considered putting video to your web site to keep the visitors more interested?I think it works., Cordelia Angelou

    Reply

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