Kern Valley Sun
Effective Nov. 1, the amount of state income taxes withheld from California workers’ paychecks will increase 10 percent. That might sound like a tax increase, but state officials insist that’s not the case.
Tax experts agree, saying this bump up in withholding taxes gives the state some room to manage the state treasury in a year that saw a political battle to get a handle on the state’s budget.
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Basically, the accelerated withholding program does not generate additional tax revenue. Instead, it front-loads it, bringing cash in more quickly in an effort to keep the state treasury stocked with funds, which is why some refer to the move as a “cash advance.” State officials have estimated that the move will generate an additional $1.7 billion in the current fiscal year.
The bottom line is that a worker’s total annual income tax bill won’t rise, and the amount owed at April 2010 tax time will be adjusted accordingly.
Simply put, if you owe taxes when April 15 comes along, the balance due will be less based on what was withheld from your paycheck in the last two months of the year. If you’re due a refund, you can expect a little more.
Taxpayers can evade the accelerated withholding schedules simply by increasing the number of allowances on the withholding forms filed with their employers.
That won’t make much difference for the calendar 2009 tax year, but it will have a bigger impact for 2010 and perhaps beyond.
“The changes that are happening are only for about nine weeks for 2009, so the impact for 2009 is minor,” said Brenda Voet, spokeswoman for the state Franchise Tax Board. “But we’re trying to warn people to go to their personnel and human resources departments for 2010 to make sure they have the proper amount of tax withheld and make any adjustments they need to make. We don’t want people to be surprised by anything.”
For low-income earners, the withholding change has minor effects. FTB said a single person earning $17,000 annually with no dependents and one withholding allowance will see his or her weekly withholding rate go to $2.68 compared with $2.44 prior to the change, a difference of 24 cents. That same person with five or 10 withholding allowances will see no change.
Those with higher wages will experience bigger impacts.
FTB said a single person earning $51,000 annually with no dependents and one withholding allowance will see his or her weekly withholding rate go from $40.58 to $44.64, an increase of $4.06.
For a married person earning $145,000 annually with two dependents and no withholding allowances, the weekly increase is $16.90 (from $168.95 to $185.85). The married $1 million-a-year earner with two dependents and no allowances will see a $173.92 weekly increase (from $1,739.19 to $1,913.11)
Even with the increases, state withholding will remain less than half the amount withheld for federal taxes.
The withholding increase taking effect today is open-ended. The Legislature could call it off at some point, but financial analysts don’t see that happening in the near future, given California’s recent struggles to balance its budget.
Also in the mix: A new tax law lowered the state dependent exemption credit from last year’s $309 to $98 for the 2009 and 2010 tax years.
“With all of the changes, it’s a good time to sit down and figure out the proper amount of tax you’re going to pay for your particular situation,” Voet said.


Comments
42 comment(s)Area Republican wrote on Nov 24, 2009 4:09 PM:
I would have thought you validate every move of that great wonderful speaker of the house Nancy Pelosi, she seems like your type of person to emulate! Very interesting indeed! "
Mac wrote on Nov 18, 2009 7:38 AM:
Area Republican wrote on Nov 17, 2009 9:49 PM:
And Trey, recently I read of an easing of MJ laws in Northern California, it can't be long before it will be for sale everywhere, tax problem solved?! "
Trey wrote on Nov 17, 2009 8:59 PM:
Mac wrote on Nov 17, 2009 8:41 PM:
kp wrote on Nov 17, 2009 3:43 PM:
State jobs were cut and citizens suffered. Get a grip on reality. 60 days with no benifits to illigal aliens would free up school overcrowding , welfare programs and social security. If they want to stay, become naturalized. Let's do this right. "
Area Republican wrote on Nov 17, 2009 1:27 PM:
Mac wrote on Nov 17, 2009 11:51 AM:
Arnold wrote on Nov 17, 2009 10:21 AM:
Tony wrote on Nov 16, 2009 3:33 PM:
" Tony, you may some day need both of those. If you look, the taxes on both are minimal....and they make a difference between suffering, homelessness and qualtiy of life. You must be young.... "
It's called critical thinking. "
Peg wrote on Nov 16, 2009 9:22 AM:
Area Republican wrote on Nov 15, 2009 11:01 PM:
louis wrote on Nov 15, 2009 1:46 AM:
Peg wrote on Nov 14, 2009 10:12 AM:
Area Republican wrote on Nov 14, 2009 10:02 AM:
Area Republican wrote on Nov 13, 2009 10:14 PM:
Ann wrote on Nov 13, 2009 1:57 PM:
Ann wrote on Nov 13, 2009 1:54 PM:
Mike wrote on Nov 13, 2009 12:54 PM:
9.75% sales tax. This will really help the California economy. I am buying everything through Amazon now.. "
Tony wrote on Nov 13, 2009 11:35 AM:
Peg wrote on Nov 13, 2009 7:33 AM:
Mac wrote on Nov 12, 2009 12:11 PM:
Mac wrote on Nov 12, 2009 12:07 PM:
Area Republican wrote on Nov 12, 2009 7:59 AM:
Reply to Dude wrote on Nov 11, 2009 11:47 PM:
Area wrote on Nov 11, 2009 11:40 PM:
Taxpayer wrote on Nov 11, 2009 11:52 AM:
Taxpayer wrote on Nov 11, 2009 11:48 AM:
Jess wrote on Nov 10, 2009 6:49 PM:
dude wrote on Nov 9, 2009 3:52 PM:
Paula wrote on Nov 9, 2009 8:52 AM:
Here is news clip from the Kern Valley Sun. "
2L2Q wrote on Nov 8, 2009 6:48 PM:
Change Withholdings wrote on Nov 7, 2009 6:15 PM:
Mac wrote on Nov 6, 2009 6:09 PM:
Mac wrote on Nov 6, 2009 6:04 PM:
Eric B. wrote on Nov 6, 2009 2:02 PM:
Dagny wrote on Nov 6, 2009 8:09 AM:
Boy are you ignorant. We're talking about STATE taxes. There are seven states that do not impose income taxes on their citizens and their infrastructures are 100 times better than ours. In California we have let the left run this state for too long and it's time to get rid of them all! "
Weekender wrote on Nov 5, 2009 11:29 PM:
Bob wrote on Nov 5, 2009 12:05 PM:
Joshua wrote on Nov 4, 2009 2:19 PM:
Where do you draw the line? The same politicians who agreed to this plan behind closed doors without consent or vote from The People can just as easily decide NOT to return the money next year or worst increase the withholding tax percentage if another fiscal emergency is declared. They can't return what they don't have! Think about it. "
to Stephen wrote on Nov 4, 2009 8:00 AM:
Stephen Den wrote on Nov 4, 2009 6:59 AM: