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San Jose, CA business tax attorney use taxesA recent U.S. Supreme Court case has prompted California legislators to change a state use tax law that affects out-of-state sellers. Under the new law, some retailers outside of California must register with the California Department of Tax and Fee Administration (CDTFA) and collect California use tax.

The law applies to remote sellers who have total sales of $500,000 in tangible personal property for delivery in California in the preceding or current calendar year. The law went into effect on April 1, 2019, so these sellers are required to collect and remit taxes on sales which occurred on or after this date. 

Examples of out-of-state sellers that may be affected by this change include online merchants, mail-order catalogs, or telephone salespeople. Retailers with a physical presence in California will continue to have the same registration and use tax obligations as before the new law was passed.

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San Jose CA tax lawyer cash transaction reportingAs a business owner, the law requires that you take certain steps when you make large transactions. For cash transactions over $10,000, you must submit a form to the IRS reporting such a payment. Form 8300 is due 15 days after the transaction is completed. Entities who must file this form include individuals, companies, corporations, partnerships, associations, trusts, or estates.

How to File a Transaction Report

The IRS recommends that businesses electronically file cash transaction reports. Electronic filing has several benefits: it is fast and easy to do, and it costs the business nothing. Businesses also have the option to file Form 8300 on paper. To file electronically, a business needs to have an account with the Financial Crimes Enforcement Network’s BSA E-Filing System.

What Transactions Am I Not Required to Report?

It should be noted that not all transactions over $10,000 have to be reported. The law is concerned only with cash transactions, rather than transactions that have a paper trail. Thus, cashier's checks, bank drafts, traveler's checks, or money orders with face amounts of more than $10,000 do not have reporting requirements. 

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San Jose business tax deduction attorneyHistorically, business owners have been able to utilize tax deductions based on the cost of assets bought for business use and the depreciation of those assets. However, the recent Tax Cuts and Jobs Act (TCJA) modified the rules regarding the deduction of expenses under Section 179(a) and the deduction of depreciation under Section 168(g). These changes affect business taxes filed for years 2018 and beyond.

Section 179(a): Business Asset Deductions

This law permits businesses to deduct the purchase price of certain assets as an expense for the year the business begins to use the property. The recent updates to the law raised the maximum expense deduction to $1 million (up from $500,000). The updated law also raised the phase-out limit to $2.5 million (up from $2 million).

This deduction is available for tangible property like tools and technology used in business. The deduction is also available for qualified real property. Under the TCJA, qualified real property includes qualified improvement property, as well as certain types of improvements to nonresidential property, which includes: 

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San Jose business tax form lawyerAn IRS deadline for business owners is fast approaching. January 31, 2019 is the date by which employers and businesses must submit wage statement forms and independent contractor forms. 

These requirements were outlined in the Protecting Americans from Tax Hikes (PATH) Act of 2015, which made it compulsory for businesses to submit duplicates of Form W-2 (Wage and Tax Statement) and Form W-3 (Transmittal of Wage and Tax Statements) to the Social Security Administration by the end of January of each year. In addition, certain Forms 1099-MISC (Miscellaneous Income) must be filed by this date with the IRS to report payments made to independent contractors. 

There are penalties for businesses that do not comply with this deadline. 

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San Jose, CA small business tax credit lawyerThe federal Tax Cuts and Jobs Act of 2017 has brought sweeping changes to many areas of tax law. One change that might have been overlooked by businesses is that employers are now eligible for a tax credit if they offer certain kinds of paid family and medical leave to full and part-time workers. If you act before the end of this year, you may be able to qualify for this tax credit.

Qualifying for Tax Credits

Eligible businesses that enact qualifying paid family leave programs or amend existing ones by the end of this year will be able to claim the employer credit. This tax credit will be available for tax years 2018 and 2019. The credit is retroactive to the beginning of the business’ 2018 tax year for qualifying leave already given.

To qualify for the tax credit, employers must meet the following requirements:

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