If you own a business in California, you know how much work it can be. You are in charge of everything from maintaining the premises, to payroll, to filing the taxes. While every detail that goes into running a business is important, making sure you are compliant when it comes to your taxes is especially crucial. If you are not, the state or the IRS will come after you.
If you are the beneficiary to a loved one's trust, there is no doubt that you want the trust to be handled appropriately. While most people choose a trustee to that they believe they can trust, sometimes the has ill intentions or simply does not understand how to be a good trustee. If you notice that a trustee is not following the terms of the trust, it is important to know that you can take action to make sure he or she starts adhering to the terms, or that a new trustee is appointed.
Finding out that you are being audited by the Internal Revenue Services is a frightening experience. Even if you think you've done everything correctly, tax laws are extremely complicated. It's easy to make a mistake unknowingly. However, the IRS is not infallible as we have seen in recent events. Sometimes auditors make mistakes too.
When you are working through the administration process of a loved one's estate, the last thing you want to have to worry about is estate taxes. Your loved one wanted his or her wealth to go straight to family members and loved ones, not to the California and federal governments. However, we have seen several examples in the news of heirs losing a huge portion of a loved one's estate to the Internal Revenue Service because of poor estate planning.
Determining one's capital gains tax can be simple for California residents, but it can also become complicated for certain kinds of assets. You need to have held on to an asset for at least a year or more or it will be categorized as a short-term capital gain and be taxed at the same rate as regular income. One should also remain mindful of the fact that, for high-income earners, the Golden State has the highest rate at 13.3 percent.
What this translates into for a high-income earner is paying a combination of state and federal long-term capital gains taxes that can hit a total rate of 33.3 percent. Don't forget to add the 3.8 percent Medicare tax to that figure. Add it all up and you can easily see how important it is to engage in some careful and knowledgeable tax planning.
Billions of dollars are at stake in a recently filed petition which claims that the IRS overvalued certain assets that belonged to late billionaire and former NBA team owner Bill Davidson. The petition, filed on behalf of Davidson's estate, alleges that the deficiency notice handed down by the IRS does not reflect the staggering loss in value that his stock holdings took at the time of the billionaire's death. The litigation will go to the U.S. Tax Court and its outcome could hold the key to how similar cases are handled here in California.