With a large number of taxpayers across the country being affected by Covid-19, weather economically or medically, it has forced millions to file for unemployment. In fact, over 43 million people have applied for unemployment since the beginning of the pandemic. In response to this, the Coronavirus Aid, Relief, and Economic Securities (CARES) Act was passed, which created temporary changes to how taxpayers receive unemployment and when they can apply. Most importantly though, taxpayers need to be aware of whether these changes could cause them tax issues at the end of the year.

You may be due a refund when filing a California personal income tax return if you overpaid during the tax year. It is important to remember that receiving a refund typically means you are getting back money that you lent to the state interest free for the year. The easiest way to receive your refund is by direct deposit (entering in your banking information on your tax return). You may also elect to receive your refund in the form of a check in the mail. Finally, you can even elect to apply your refund to your next year’s tax obligation.

The tax brackets used to calculate how much you will pay in California state income tax operate similarly to the federal income tax brackets; taxpayers with lower earnings pay less in taxes while those with higher earnings will climb the brackets. The percentage of tax that is paid in each bracket is of course lower than the federal brackets (though California state income taxes are among the highest in the country). Understanding what tax bracket you fall into will help you determine whether you need to make estimated tax payments, adjust the amount of tax withheld from your paycheck, or how much of that pay raise will be taxed at the next bracket.

What is the CDTFA?

Whether you’re a small business with few employees or a large company with several hundred, understanding the cost that comes with having employees is essential. Many employers focus on the wages that will be paid but, they often neglect to consider the tax obligations that are attached to those wages. Though payroll taxes are more significant at the federal level (IRS) it is just as important to know what is happening at the state level. In this blog, we will discuss some initial steps that must be taken when hiring a new employee, what taxes must be withheld from the employees wages and how those calculations are done in the State of California.

California has a unique tax system, which is managed by several different tax agencies. Each tax agency handles a specific area of tax law, which includes income tax, sales tax, property tax, and employment tax. Within each tax agency, there is a department dedicated to collecting tax debts owed. In this blog, we are going to focus on the agency that manages California’s income tax laws – the Franchise Tax Board (“FTB”). More specifically, we are going to review the tools the FTB has at its disposal to collect delinquent tax debts.