Sure tax season is 10 months away but you still can protect yourself now if you live in the state of California.
As you know, California is starting to issue IOUs to those that have lower priority on debt held against the state. The lowest on that totem pole are any taxpayers who are owed a refund. It is very possible that this IOU system will continue for some time, even as late as next calendar year when you are filing your 2009 taxes. Remember. April 15th 2010 is the next calendar year but it is within the current IOU-laden fiscal year for California.
What does this mean for you? If you are expecting any sort of tax return there is a chance that you will, instead, receive an IOU. As a result you should seriously consider (legally) reducing the amount of tax withheld to a point where you at least wind up break-even (or even owing a little bit) when you file your taxes for 2009. If the state owes you anything do not expect to receive it in a timely fashion. Better it be in your pocket than there’s.
Also remember you have paid half of your income taxes for the year so you’ll need to account for that as well.
This is probably extremely critical if fear you may be unemployed in the near future. You may find yourself in a situation where you would wind up with a tax refund but not see the much needed cash in time.
Please note that your situation may vary depending on your specific circumstances so you should ALWAYS contact a professional for the right strategy. I just contacted an accountant and wanted others to at least have the chance to do so as well.
Forewarned is forearmed.
Oh and be forewarned about the next major drop in real estate on the San Francisco Peninsula. Here is an article that shows why prices are due for another 30% drop.
I hope folks do change their withholding amounts, it will only quicken California’s death spiral into tax oblivion. I would however not be surpised to hear that California tax authorities put a moratorium on your ability to change the amount you choose to withhold though.
The problem in California is NOT only the incompetent local government, but the residents as well, why?
As a resident for the last 35 years, the mentality of the Californians didn’t change, it got worst.
This is a state run by Republicans against taxes of any shape: the rich Rep. don’t pay the personal-taxes in the way it should be, they have too many loopholes.
The Democrats the trying to protect their Burocracy at any cost with waste, and keep running the state the Mexican way “Mañana”
#1 unemployment= too high
#2 property-taxes= unpaid
#3 Salaries vs. prices= Disconected
#4 Home owner sellers= Hullucinations
#5 the general mentality= Mental desorden
Who’s to say the CA FTB will honor your withholding status? They may just take a certain amount of money from every paycheck, regardless of withholding.
I have lived in this state for 45 years and have seen it get worse and more broke over the years. The issues are:
1.) Over paid state and county workers with an unrealistic (95% of there salary when they retire)
2.) No Rep. or Dem willing to deal with the state’s illegal immigration issue head on. Neither wants to lose potential votes if/when amnesty is granted. They are in a race to whore out our aging state for votes. Illegals are a huge drain on California.
I agree with CaliforniaNative – the Dems want the benefits to continue to illegals via the State workers who work for agencies. These State workers are the hub and spoke of Democrat power in LA, Sacto, and SFO. Many State workers fit the PC profile: boomer females, Mexican, black, Asian, immigrant, etc.
The Repubs support for illegals comes from Big and Small Ag in the Central Valley and builder interests in Orange, San Diego, and Los Angeles Counties. The Republicans are loathe to raise taxes on the rich ($250k+) even though these people are generally the ones to hire illegals/L-1s and H-1Bs in their businesses.
Homeowner Associations are a huge employer of illegals through contractor work.
The whole thing is crashing down because no politician wants to have his or her constituency (State workers and Mexican-Americans, Big and Small AG, and the Building Industry) experience any consequences to their voting choices.
About 2M people have left the State over the past 5 years.
The pols still do not get it.
Yeah if you owe taxes at the end of the year, they add a penalty! Its only 40 dollars or so but the point is I owed taxes last year for this great state and I knew I would owe. I saved up and when I was going to pay in full, they still hit me for not withholding enough from my stupid paycheck!!!! JERKS!
Thanks for pointing that out. Exactly why you will want to consult a financial advisor before making this move.
blaming the voters for the California is the mantra of the Left these days. Those damn propositions.
The reality is that even when the Internet was booming and housing prices were increasing 20%/year the state outspent every single penny by a margin of 30-40%.
Please tell me how that is in any way responsible government? We have had an out of control legislature for 30 years. We have also seen the most irresponsible spending in the nation. Don’t blame the voters or taxpayers, put the blame squarely where it belongs; on irresponsible legislators.
I think like everything else there is plenty of blame to go around. I definitely agree that the legislators share in that blame but there is still room for the voters. At the end of the day due to ballot initiatives 70% of the budget is NOT at the discretion of the legislature (which, I guess, is both a good and bad thing). As a result even if you could elect a competent government they wouldn’t have much room to do anything. The whole system needs to be rewritten as a Constitutional Convention might accomplish.
To Misstrial , L-1s and H1-Bs are not for illegals, they’re only for legal aliens. Once you’re out of status, you cannot apply to L1 or H1B period.