State’s tax withholding bump-up starts Nov. 1


Published on Tuesday, November 10, 2009 10:17 PM PST

Cathy Perfect
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.

The increased withholding comes on top of a 0.25 percent state income tax increase and a reduction in the dependent credit, also enacted as part of the state budget.

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:

    " Mac, you the "great liberal" made a statement like this, "Unfortunately children born in this country are US citizens, until we change this......etc. etc.! ! !" And you are against illegals coming to America?
    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:

    " Trey, I agree with much of what you say. Unfortunately, children born in this country are citizens, so until we change that, those children are entitled to services that their parents may not be. Also, there is the issue of the lower cost of employing illegals. Many businesses do not want them gone because they cost less to employ than a citizen. And since business pretty much owns many of our politicians, don't look for a big change in immigration. "

    Area Republican wrote on Nov 17, 2009 9:49 PM:

    " kp, you sound like someone who has worked hard for what you earn and would like to have some of those funds work for you now. That is the problem here, the "so called-Distribution of Wealth" promoted by Obama, that is the wealth of the Middle Class, you can bet those truly wealthy ones like Rockefeller are not giving a dime, they have jillions of attorneys who keep them tax free!
    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:

    " I have issues with "illegal" aliens -- if they are "illegal" why do we support them and provide them benefits? And entertain issuing them drivers licenses? Quite a contradiction. If they are "illegal" get them the heck out of here -- NOW. We have enough problems taking care of the citizens of our Country who pay taxes and contribute. Pot is illegal, so can I sell it legally? If not, why? Point made? "

    Mac wrote on Nov 17, 2009 8:41 PM:

    " Barbara, the most recent Congressional Budget Office report (from 2007, actually, so this was during Bush's time) is online for anybody to read. I suggest you Google it and educate yourself. Illegal aliens do pay taxes, that is not in dispute. You cannot get around sales tax, or tax on gasoline. Many of them use fake or unused social security numbers so they can get jobs, and payroll taxes are taken out. So your Medicare is being paid for partly by illegal aliens. "

    kp wrote on Nov 17, 2009 3:43 PM:

    " I don't mind the tax raise BUT if we weren't paying claims to people who have acquired illigal social security numbers or providing freebees to illigal aliens perhaps we could recover some of our monies.
    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, stop drinking the "CZAR kool-aid" regarding illegals, they cost us billions of dollars per year here in the state of California, most of them do not pay taxes because they don't have social security numbers, get it? Most of them are day workers paid cash by the "law breaking employers who would rather do that then pay for their benefits!" "

    Mac wrote on Nov 17, 2009 11:51 AM:

    " Actually, that's a popular opinion, but not quite true. According to the Congressional Budget Office, overall tax revenues of all types generated by both legal and illegal immigrants exceed the cost of the services they use. At the state/local level, the costs of services were slightly higher than the revenue generated, but for education, health care and law enforcement, they account for less than 10% total spending in those areas. Basically, they do cost, but the cost is modest. Certainly not enough to dig us out of the hole we're in, should we stop providing services. "

    Arnold wrote on Nov 17, 2009 10:21 AM:

    " We should stop giving illegal aliens benefits. They are a major reason why California is in so much trouble. Plus most of the money they make goes to mexico, that surly does not help our economy. "

    Tony wrote on Nov 16, 2009 3:33 PM:

    " Peg wrote on Nov 14, 2009 10:12 AM:
    " 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:

    " "he is always running to the other countrys across the ocean" Okay, call me crazy but I thought every US President did this. Isn't that called Diplomatic Relations? Oh, AR...you're scraping the bottom. And BTW, I'm still waiting for you to disclose the grants you complain about over and over and over..... "

    Area Republican wrote on Nov 15, 2009 11:01 PM:

    " Ann, I always knew you were from the "throw-away-society." It speaks of your character too. "

    louis wrote on Nov 15, 2009 1:46 AM:

    " where is zoro when you need him "

    Peg wrote on Nov 14, 2009 10:12 AM:

    " 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.... "

    Area Republican wrote on Nov 14, 2009 10:02 AM:

    " Did you not think I knew you are part of the "throw-away society?" All people who talk like you do, "my way or the highway"---"leave this state if you don't like your business being taxed to pay for the ones who don't want to work" etc. etc. etc. Liberal-speak is a dead givaway in determining socialist tendencys in peoples personalitys. Obama wants a One world Order, that is why he is always running to the other countrys across the ocean, no matter what is happening to us citizens of America, he could care less about us! "

    Area Republican wrote on Nov 13, 2009 10:14 PM:

    " Well, my God, why wouldn't a liberal want to stay here in California? Obama is giving stimulus money to all liberals, of course he is not telling them he has to "print more money!" All one has to do is be politically connected with the Democrats or the "local political operatives" and you will be given money to operate whatever "entity" you dream up for any amount of time you want to support yourself. I just read a report of a motorcycle track being developed in Kernville, however, the Kern County has not approved of it yet! "

    Ann wrote on Nov 13, 2009 1:57 PM:

    " Further to the topic here, yes California is becoming a tax-heavy state and it is too bad that businesses and retirees are forced or enticed to move elsewhere. I will say though that California is Paradise when it comes to climate and things to do and places to go. Everything comes with a price. It is a travesty and I am not defending the tax increases, but am willing to have faith and patience that things will better themselves if enough letters are written and enough "other" people move out. I choose to stay. "

    Ann wrote on Nov 13, 2009 1:54 PM:

    " Area Republican, I had a vinyl 33-RPM record album that I loved... it was from the mid-60's and was by the Dave Clark 5. There was a song that went, "I'm in pieces, Bits and Pieces..." and the needle always got stuck and repeated the same phrase over and over and over and over until I moved it. That is what you sound like with your "political operatives", "community Organizers, "grant moniess" etc. etc. I ended up throwing the vinyl album away and replaced it with a CD. That is called progress. "

    Mike wrote on Nov 13, 2009 12:54 PM:

    " Yeah,

    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:

    " I have a great idea. Stop SSI and Medicare tax. I don't use them or anyone in my family, why should I have to pay? "

    Peg wrote on Nov 13, 2009 7:33 AM:

    " OH, AR, here you go again! You have mentioned grants many, many times and each time I have asked you to tell us what grants you're talking about and I have never rec'd an answer. So, are you going to avoid this again or are you going to tell us what useless grants the liberals have rec'd that you object to? "

    Mac wrote on Nov 12, 2009 12:11 PM:

    " Taxpayer, I'm not sure how you can live in this horribly polluted state and have a problem with green energy. Also, do you have any idea how many lives would be saved (not to mention money) curing illnesses with stem cell research? As far as "saving the planet", well, the planet is going to be just fine. It will shake us off and keep smiling. It's the people living on it who are going to have problems. But we'll all be dead and gone and it's our grandchildren who will have to try to live with it. "

    Mac wrote on Nov 12, 2009 12:07 PM:

    " Um, AR, these are STATE taxes we're talking about, which have nothing to do with Obama. "

    Area Republican wrote on Nov 12, 2009 7:59 AM:

    " You are right, it is theft! And it will continue with the POTUS and his "CZARS" we have in DC! Most of the people in this valley were/are conservative, having worked, saved, and invested their monies. The libs want to be "community organizers" and "political operatives" so they can use the grants and the stimulus moneys for their own use. I have monitored at least 5 grants in this valley used in the last 5 years by these types to support themselves by acting as the "facilitators" of these agencys, that is until the money is gone. "

    Reply to Dude wrote on Nov 11, 2009 11:47 PM:

    " Should I go back to work so that you can feed off my taxes? No rational person would say that this is "needed". It's THEFT. "

    Area wrote on Nov 11, 2009 11:40 PM:

    " Hey Taxpayer, that is funny! "

    Taxpayer wrote on Nov 11, 2009 11:52 AM:

    " Anyone ever here of IOU's instead of giving back your money. This ought to be real interesting. I guess they want to see how many people can leave the state as fast as possible. This is a new disaster drill. "

    Taxpayer wrote on Nov 11, 2009 11:48 AM:

    " Let's mot forget stem cell research, green energy, saving ther planet and all of the other billions we need to rermain the dumbest state in the union. "

    Jess wrote on Nov 10, 2009 6:49 PM:

    " Someone wrote, "you should quit using roads if you don't want taxes"? I'm laughing because that is such a liberal thing to say. Someone should inform that person how much he/she pays at the pump in CA for quite possibly the worst roads in all of America. Obviously, we need some taxes and no one would deny that, but when are those who are paying the majority of these taxes going to break. California should know this, talented people are mobile. "

    dude wrote on Nov 9, 2009 3:52 PM:

    " Stop complaining and get back to work. This is a necessary measure that ensures us all a brighter future. wait..does this ensure a brighter future? "

    Paula wrote on Nov 9, 2009 8:52 AM:

    " Paula,
    Here is news clip from the Kern Valley Sun. "

    2L2Q wrote on Nov 8, 2009 6:48 PM:

    " Riase your hand if you think this "temporary" tax increase will become permanent. My guess is they are hoping we forget about it after the first yeat, and they can just roll it over into several more years. And just wait until they are able to charge us for the health reform on top of that! "

    Change Withholdings wrote on Nov 7, 2009 6:15 PM:

    " I heard on a news program that adding a few more exemptions to your STATE ONLY DE-4 (Fed's W-4 equivalent) will take back your money from the theives at the state. "

    Mac wrote on Nov 6, 2009 6:09 PM:

    " Don't forget, "illegals" are not the only people who get paid under the table. The husband of one of my co-workers works under the table; he's a middle class white guy and Republican as it happens. It's also reactionary to blame "the libruls" for everything. As long as both sides do nothing but sit and point at each other things will never get better. You "conservatives" long ago lost any claim to that title as well. So let's all take our share of the blame and fix things. Or still be sitting here pointing fingers ten years from now. "

    Mac wrote on Nov 6, 2009 6:04 PM:

    " It's a bit reactionary to blame everything on "the illegals". I don't think they can avoid paying sales tax by stating they are an undocumented alien, so they pay that. If they rent they pay property taxes through their landlord like any renter does. The "illegals" who use a social security number to work under pay income taxes on wages earned just like you and I do. If they drive a car, they pay registration and gas taxes. So, even the ones who get paid under the table still pay into the system by other means. "

    Eric B. wrote on Nov 6, 2009 2:02 PM:

    " Dear California- Thank you for "withholding" (not a tax...of course) more of my paycheck to pay for your erroneous spending habits. Clearly you have worked hard for MY money so help youself. Please GET OUT of our lives as quickly as you possibly can. "

    Dagny wrote on Nov 6, 2009 8:09 AM:

    " To the "No taxes?" writer . . .

    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:

    " State taxes are frittered away. They got to ILLEGALS and unchecked WELFARE and LIBERAL PROGRAMS. Give us back our money and let US decide what to do. The state has a $50B annual tab for labor. That's NUTS. That equates to $4000 per year per tax paying household. "

    Bob wrote on Nov 5, 2009 12:05 PM:

    " Why not stop just two months of benefits to the illegals in Ca. That equates to $1.7 billion. Why keep going after the ones who are feeding the system. "

    Joshua wrote on Nov 4, 2009 2:19 PM:

    " RE: "No taxes? I guess you are willing to give up using roads..."

    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:

    " No taxes? I guess you are willing to give up using roads, fire protection, law enforcement, safety checks on food, water, medication etc.Oh and, no military to protect oil for your car. Yes, a society with no taxes is a frightening thought. "

    Stephen Den wrote on Nov 4, 2009 6:59 AM:

    " They just popped us with this one with no warning, discussion, and no mercy. This is the Tax Day Tea Party's dream of unwarrented taxation without representation. I call for rejecting all taxes period. Fight for our sweat of the brow. This is compensation for labor we worked for and is our property not the states. "

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