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Recent blog posts

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 small business payroll tax lawyerCalifornia employers are responsible for withholding payroll taxes, filing returns, and paying state and federal payroll taxes. The laws governing payroll taxes are complex, and as your small business grows, the onerousness of compliance with these tax rules will intensify.

What Are Payroll Taxes?

California has four state payroll taxes. Two are paid by the employer: Unemployment Insurance (UI) and Employment Training Tax (ETT). Two are withheld from workers’ wages: State Disability Insurance (SDI) and Personal Income Tax (PIT). Payroll taxes are administered by the Employment Development Department (EDD).

In addition, employers must handle federal payroll taxes. A small business will be required to pay federal taxes for Medicare, Social Security, and unemployment (FUTA). Also, an employer withholds federal personal income taxes, Medicare, and Social Security from workers’ wages.

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San Jose virtual currency tax attorneyThe Internal Revenue Service (IRS) has no plans to create a voluntary disclosure program for virtual currency similar to what has previously been offered for undisclosed foreign assets, an agency official recently said in a speech at a tax symposium.

In 2014, the IRS stated that cryptocurrencies such as Bitcoin that could be converted to traditional currencies are considered property for the purposes of taxation. Thus, a person may experience a gain or a loss when selling or exchanging cryptocurrency based on the value of the cryptocurrency at the time of the exchange. 

Because cryptocurrencies are classified as property, general taxation rules of property will apply. The sale of cryptocurrencies, the use of them to purchase goods or services, or retaining the cryptocurrencies for investment purposes generally have tax consequences, which may mean taxes will be owed.

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San Jose, CA property tax assessment attorneyIn the face of receiving dramatic annual increases in property tax bills, in 1978, California voters passed Proposition 13, which has limited the rate of property tax increases for the past 40 years, so long as certain criteria are met. 

About Prop. 13

Prop. 13 limits property tax increases to 1 percent of the property’s assessed value. Assessed value cannot be increased more than 2 percent per year. Prop. 13 also provides that property taxes may include any bond payments or special assessments as approved by voters. All special assessments must receive a two-thirds vote. Importantly, a key provision of Prop. 13 for tax planning purposes is that properties will only be reassessed after an ownership transfer or if substantial improvements have been made to the property.

Efforts to Change Prop. 13

Recently, the voters of California rejected an effort to expand protections for property owners as set forth in Proposition 5. Prop. 5 would have allowed some homeowners to take lower property taxes with them when moving.

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San Jose tax planning attorneyIf you are one of the millions of Americans who is saving for retirement, the IRS recently announced some good news for you. Starting in 2019, you can contribute more money to certain retirement accounts, including IRAs, 401(k)s, 403(b)s, most 457 plans, and the Thrift Savings Plan for federal workers. These changes will allow many people to save more money for retirement, and more tax deductions will be available.

Changes to Contribution Limits and Deductions

With this change, the IRS has increased the annual IRA contribution limit for the first time since 2013. The IRS also announced rules that make it easier to qualify for a Roth IRA as well as to deduct contributions to a traditional IRA. The changes include:

  • With respect to the contribution limits to IRAs and Roth IRAs, the limit in 2019 is $6,000. That is a $500 increase from years prior.
  • An extra $500 can be contributed to 401(k)s, 403(b)s, most 457 plans, and Thrift Savings Plans. The new limit is $19,000 in 2019.

Starting in 2019, more people will be eligible for Roth IRAs. These IRAs have the distinct advantage of tax-free distributions during retirement. Only those under certain income levels qualify for a Roth IRA.

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