California’s New Tax Withholding Scheme.. Part II.

November 6, 2009

At the heels of RT’s last post “California’s New Tax Withholding Scheme,” I wanted to chime in about a couple of other things I had learned.  I had watched a piece on it on the local news, but found the highlights I took away nicely summarized in this article from the LA times.  I’ll just mention a couple things from the article, and leave the rest of it up to you to take a look.

As RT mentioned, the withholding is basically serving as an interest free loan to the state.  As the LA Times puts it,

“Think of it as a forced, interest-free loan: You’ll be repaid any extra withholding in April. Those who would receive a refund anyway will receive a larger one, and those who owe taxes will owe less.”

While it certainly provides relief to some of us to know that we will probably get the money back in April, for others the extra withholding may be dipping into an already tight holiday budget, or extra money they were hoping to earn some interest on.  My guess is that even though RT has pointed out that the difference is probably hardly noticeable on the paycheck, people will still panic since most of the U.S. population is already actively cutting back on spending.  Knowing the state is holding onto more money probably won’t do much to encourage consumers to spend more, which is what businesses typically depend on as we approach the holiday season.  For those that, for whatever reason, would like to see their paychecks unaffected, the LA Times also suggests a workaround.

“Savvy taxpayers can get around the state’s maneuver by increasing the number of personal withholding allowances they claim on their employer tax forms, said Brenda Voet, a spokeswoman for the state’s Franchise Tax Board.

“People can get out of this,” she said, noting that most people would have to change their allowances through their employers. California’s budget leaders are banking on the hope that most won’t.”

Truth be told, I probably won’t take the time to file a new W-4 form at work but others may find this a good opportunity to hold onto more money per paycheck.  For those who tend to glaze over government related news (I’ll admit to being one of them sometimes.. trying to change that), hopefully this provided some good, easy to understand information for you!

-debs


California’s New Tax Withholding Scheme

November 1, 2009

The Governator

Effective right after Halloween, November 1st, the citizens of California will be subject to a higher income tax withholding. This will last, at least, until the end of the year. Assuming we all file our taxes correctly (ha!) this will effectively serve as an interest-free loan to the state for the rest of the year. I suppose this is the state government’s alternative to raising taxes, knowing full well that they stand to rake in some money here if/when people get confused about how to file their taxes and subsequently receive less money back. Is that too cynical?

California is raising the withholding rate by 10% on your paycheck. What does this mean for you? The truth is you’ll hardly notice it. But let’s give an example just for fun!

Let’s say you’re single (or dual income married, or married with multiple employers) with zero withholding allowances and your biweekly salary is $1000. That’s equivalent to $52,000 per year. From January 1, 2009 to October 31, 2009 your biweekly paycheck would reflect the state withholding $20.63. From November 1, 2009 through December 31, 2009 your biweekly paychecks will now show the state gouging you out of $22.69!

I guess that’s relatively harmless, right? I guess things could be worse, but let’s just hope that the tax returns we’re expecting don’t come back in the form of IOUs. More food for thought: after three months, you’re out one footlong sandwich from Subway. Think about that…

The government site has a moderately useful FAQ and general 2009 Rates and Withholding details for you to peruse including PDFs of the actual withholding rates.

I think it was a John F. Kennedy that once said: Ask not what your country can do for you, but what you can do for The Terminator.

-RT


Thinking of Buying a House?

August 26, 2009

blog_house

Unless you’ve been living under a rock or over a rainbow, you’ve surely noticed that the global economy has suffered a massive bout of what I like to call EPIC FAIL. But you might also have noticed that the month of July just posted a 9.7% increase in sales of new houses since June. I’m sure this is in no small because the government is giving $8,000 to first time homebuyers that I’ve heard can even be counted toward your down payment.

A lot of twentySomethings have been working for a few years and have stockpiled a good sum of money while not having enough of it in the market to be squandered. Many of us also are points in our lives where we’re looking to settle down, maybe buy a house and start a family. It’s only natural to follow the mold and think of buying a house these days if you still have a job and money in the bank. After all, housing prices haven’t looked like this in years!

If you’ve only recently begun thinking of buying a house, don’t forget that the price of the house is not the only thing that matters. HOA (Homeowners Association) fees are imposed on many condos and apartments, and some housing neighborhoods as well. In California, cities, counties and districts can impose Mello-Roos taxes on your property on top of the state property tax. Then there are maintenance fees that renters don’t have to think about, like when your toilet breaks or your shower leaks or your dishwasher breaks. Oh, and if you’re not paying monthly utilities for water and trash, those will officially become your responsibility. Those are all landlord problems, and you’re thinking of becoming a landlord! On top of all those there are the fees you’re going to pay just to buy the house, which may include closing and escrow fees (and buying fees if you eventually sell the house somewhere down the line).

In the interest of full disclosure, I do not own a house and I’ve never purchased one. That really means there may be even more costs I haven’t considered or mentioned, like costs associated with taking care of your lawn. But for many people this is a worthwhile investment, if not financially then just because people take pride in owning their home. For those of you looking to buy, I advise you to make use of this Rent vs. Buy Calculator provided by the New York Times website.

Happy Hunting!
-RT


CA Fights Against Poor Health and Bulging Waistlines

July 15, 2009

As results of America’s Fattest Cities are being released, California is taking action to fight against climbing to the top spot.  It’s being reported that an alarming 44.4% of children in Mississippi, America’s “fattest state” are obese.  When I read that, I wondered how such a shocking statistic was possible for a single state.  I suppose CA leaders asked themselves the same thing too, because as of July 1, three new diet laws are in effect in California.

Starting July 1, all restaurants will be required disclose nutritional information in either indoor or outdoor menus, or in the form of a brochure that will be offered to customers.  In 2011, restaurants will be required to disclose nutritional information in all three forms.

Starting July 1, the current ban on trans fat has been extended to include food offered in school vending machines and by vendors on school.  Trans fat has already been banned in school cafeterias.

Lastly, while soda has already been banned at elementary and junior high schools, the new legislation also includes a soda ban on high schools.  The new restriction on drinks also restricts schools from selling drinks with added sweeteners, and whole milk.  This will hopefully encourage students to gravitate towards healthier choices and live an overall healthier life.

Whether or not this new legislation will make a true difference is still up for debate.  In some ways, I think those who make poor diet choices may still continue the same lifestyle, and students can still easily access their favorite trans-fat laced snacks and unhealthy drinks outside of school.  However, there are also plenty others who will think twice when the nutritional information is laid out in front of them, and students who have become used to drinking and eating healthier due to restrictions on campus will naturally carry the same healthier habits outside of school.  In any case, it is important to make sure that California stays away from becoming one of America’s “fattest states” and hopefully this legislation helps the cause.

-debs


Closing State Deficit… At the Expense of a Rich Future

June 3, 2009

It has recently been reported that Shwarzenegger’s response to CA’s $24 billion deficit is a proposed closure of 80% or 220 of the 279 California state parks and taking even more away from invaluable state programs.  So now not only will it be more difficult to raise our children to embrace California’s natural beauty, getting quality education will be even further out of reach.

When I look back on my childhood, the some of the fondest memories I have are camping with my family at Big Sur, going to Sunset Beach in Santa Cruz with my friends in high school when we finally had drivers licenses, thinking about one day going to Half Moon bay, hiking and really soaking in California’s natural beauty.  This appreciation for California beaches and state parks has stayed with me and now when I think of my more recent fond memories, I think about running through Torrey Pines State Beach, Torrey Pines State National Reserve to train for and during the La Jolla Half Marathon.  I think about Silver Strand state beach and how I’m looking forward to possibly running another race along that beach in a couple months.  I think about the first time I went fishing at Lake Cuyamaca, next to Cuyamaca State Park.  I think about Carlsbad State Beach and the brief stop I made there a year ago, leaving with a mental note to go back.  What are some of your similar memories?  I know you must have some.

Picture I took at Torrey Pines... it's even more stunning in person

Picture I took at Torrey Pines... it's even more stunning in person

What all these have in common is that they are all part of the list of state park closures proposed if Shwarzenegger’s plan is put into action.  We often take these beautiful sights for granted, when in reality the work that goes into keeping these landmarks open is apparently deemed excessive by our governor.  It devastates me that there is a chance that not only will my quality of life be affected, but that one day my kids and the generation that comes after me may never have a chance to experience such an enriched life.  I think that losing our state parks is one of those things that we won’t fully realize how it’s affecting us until it’s gone.  I know that the state deficit is not a trivial issue, but neither is slowly taking away things that make California great.  There has got to be another way, and I hope that together we can save California.

Sunset I captured at Cuyamaca

Sunset I captured at Cuyamaca

Check out the list of parks: “Proposed state park closure list is not for the faint of heart

-debs


Vote or Don’t Friggin’ Complain! Seriously… ever.

May 26, 2009

Young people make me sad sometimes. We’re a substantial portion of the voting population, yet politicians running for public office hardly listen to the things we have to say about the issues we care about. And I don’t fault them for that one bit. The fact of the matter is that, by in large, we don’t vote. Maybe we vote a little more in presidential elections – especially when there’s a charismatic black guy running for office – but honestly, we’re pathetic. And I hear people complain SO MUCH about the state of the government and our country, but does the average 20something vote in every (especially local) election? Methinks not, friends.

Excuse me if this is something of a rant, but it just bugs and disheartens me that our youth (myself included, of course) are so short-sighted and self-righteous at the same time. I voted by mail in today’s election (Editor’s note: This was originally written on May 19th, the day of a California state special election), and even though I knew it was a very important (that’s why they call it a “special”) election I still had to really push myself to get my ballot out there.

According to the L.A. Times, some 2.4 million Californians cast ballots by mail for the latest state election compared to back in November, when 13.7 million voters put in their presidential tallies. An 82.5% drop-off from six months ago? In the midst of the biggest economic crisis since your grandparents were graduating from high school? Really!?

OK, fine. I can accept that 20somethings don’t quite comprehend how important these elections are, or what long-lasting effects they’ll have. I can take that because no one is quite sure how these propositions will affect California’s economic outlook (as goes with all elections, really). But understand that if you don’t regularly vote in elections, both state and local, although local ones probably have more immediate impact on your life, you have no right to complain about your government. Ever.

-RT