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Common adjustments for California income tax: part two

| Mar 21, 2013 | Uncategorized |

Last week we talked about a few common income adjustments that California taxpayers can use. For example, unemployment compensation and some disability benefits are not taxable in the state, which can lead to an adjustment of your taxable income and help you keep more of your money.

While federal tax laws are consistent all over the country, there are several provisions of California’s tax code that make this state’s taxes unique. It can be confusing to know exactly how to differentiate between your federal and state returns with all of these rules, so consider seeking the help of an expert.

First, if you rent in California you’re in luck. The state offers a renter’s credit to people who rent property. You may qualify if you have lived in a rented space for at least six months and if your income is less than $35,659 (or $71,318 if you are married filing jointly or head of household). The credit is $60 if you are single or $120 married filing jointly or head of household.

T capital gains tax is also handled differently in California. Many states have a lower tax rate for capital gains but here there is no different rate. If you have a gain on a stock sale that income is taxed just like the rest.

California is also making efforts to collect more “use tax,” including adding a line to the personal income tax return for reporting and paying use tax. This allows the state to collect what is basically sales tax on purchases made outside the state.

Source: The Orange County Register, “Understanding California’s tax codes,” Patrick Harper, March 6, 2013

Our Bay Area law firm helps families and individuals with a range of tax issues, including IRS audits, tax litigation and business and professional deductions and asset depreciation.

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