NEW Income Tax and Sales Tax Laws
Income tax
California’s maximum income tax rate increases from 9.3% to 12.3% for taxpayers with taxable income of more than $250,000. The rate increases even more for taxpayers with adjusted gross income in excess of $1 million to 13.3% after adding a recent 1% mental health surcharge. Higher rates are retroactive to January 1, 2012. Our Golden State now has the highest maximum state tax rate in the nation. The increase is “temporary” and expires in seven years. We’ve heard this “temporary” word before, haven’t we?
Sales tax
California state sales tax increase by .25% for four years, beginning January 1, 2013. In addition to the statewide rate increase, some cities and counties have additional voter-approved district taxes. True to form, our Golden State also has one of the highest sales tax rates in the nation.
New general laws housing
AB 278 bans banks from practicing “dual tracking” – renegotiating mortgage payments with struggling homeowners while simultaneously pursuing foreclosure against the same homeowners.
Landlords, tenants & foreclosures – New laws
– Ban foreclosures on borrowers who are in loan- modification proceedings.
– Mandate that a tenant renting a property that is in foreclosure may keep possession of it until the lease expires.
– Guarantee struggling homeowners a reliable point of contact at their lender.
– Imposes civil penalties on fraudulently signed mortgage documents.
– Prohibit landlords from requiring that rent be paid online.
– Landlords are not permitted to require that tenants declaw or devocalize pets.
Wildlife
Maximum fines for animal fighting double from $5,000 to $10,000 for people convicted of cockfighting.
Education college textbooks
Help is on the way for students coping with the overwhelming cost of college as a new website will provide free digital access to 50 textbooks by the start of the 2013-2014 school year for lower-division courses in the University of California, California State University and California Community College systems. Hard copies will cost $20.
Fees
California State Universities may not establish, adjust or reallocate student fees without the approval of student representatives and may not raise fees after the first 90 days of the school year. In other words, UC and Cal State Boards of Regents must now consult with student groups before deciding on increases.
Financial aid for injured student athletes
For California colleges that take in $10 million in sports revenue annually (USC, UCLA, Stanford and UC Berkeley) athletes become eligible for added financial assistance if they suffer career-ending injuries and lose a sports scholarship before earning their degree.
School Aid for undocumented students
The 2011 Dream Act allows students in the country illegally to receive taxpayer-financed aid to attend universities and colleges in California.
Vaccination for children
Parents who decide not to have their children vaccinated will need a signed waiver from a doctor verifying that they were warned of risks and benefits associated with opting out of vaccinations before registering their children for school.
Child sexual abuse
AB 1434 requires coaches and administrators in K-12 schools who have regular contact with children to report suspected child sexual abuse. New law was prompted by the scandal involving former Penn State University assistant football coach Jerry Sandusky, who was convicted of sexually abusing 10 boys. Authorities say some former co-workers knew of the abuse but failed to report it to law enforcement.
New Employment Laws
Wage garnishment:
Assembly Bill 1775 increases the amount of wages exempt from wage garnishments to $320 per week, effective July 1, 2013. Under the new law, the amount of wages exempt from garnishment is now tied to the California, rather than the federal minimum wage. Memo: California minimum wage stays at $8 per hour for 2013.
Social media password restrictions
AB 1844 prohibits an employer from requiring an employee or applicant to disclose a username or password to access personal social media.
New public pension rules
Public employees hired after January 1, 2013 will have to wait longer to retire — up to age 67 for maximum benefits for many workers — and there will be new limits on how much pay they can collect. The pension changes were sought by Gov. Brown as part of an overall plan to reduce government spending.
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Victor Santos Sy, CPA, MBA, provides professional services in accounting and tax controversy including IRS audit defense and offers in compromise. He also advises clients on choices of entity including corporations for small businesses and LLCs for rentals. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation at 704 Mira Monte Place, Pasadena, CA 91101. The firm celebrates its 35th anniversary this year. You may email tax questions to Vic at [email protected]. You are welcome to visit our website for more than 300 tax tips at www.victorsycpa.com.