The new year is now upon us, which means new beginnings as well as new taxation rules for millions of people. If you live in California, now is the time to start preparing your tax returns for 2021. While many things will remain the same in the year ahead, there have also been some changes that you need to be aware of.
In order to ensure a stress-free 2021 and make sure that you are on the right side of the IRS, it is important to stay up to date on California tax law. With that in mind, here is our essential guide for those preparing their new year taxes in California.
1 . Consult California Taxation Experts First
The first thing that is worth noting is that California continues to have one of the most demanding and complex tax systems in the country. High-income Californians pay a higher marginal tax rate than virtually any other state, and state tax authorities wield a huge amount of legislative power.
That is why it is essential that you consult a California taxation expert before you file your taxes. Trustworthy and established accounting groups such as https://pacificgroupla.com/taxplanning.php will be able to tell you everything you need to know and ensure that you remain on the right side of the law when filing your 2021 taxes.
2 . Do I Have to Pay Tax in California?
When it comes to California tax help, the first question you should be asking is whether or not you need to file California taxes at all. California has a strong reach into the rest of the country, meaning that you may have to file tax returns there and pay California income tax even if you do not reside in the state.
If you gain any income from a source in California, you will likely have to file a tax return there. If you have spent more than 45 days in California in the past year and have earned income there, you will most likely be treated as a tax resident. If you have any income connection to California at all, you should consult a California tax planner.
3 . New Tax Brackets for 2021
While LA tax assistance is important, it is also worth noting that all taxpayers across the country, not just in California, will be subject to new income tax brackets in 2021. The IRS recently released their latest tax brackets for the year ahead. Single taxpayers now face a 10% rate on all taxable income up to $9950.
On the other end of the scale, anyone with a taxable income over $523,600 will now face a top marginal tax rate of 37%. In California, top-income earners will face additional state taxes, worth up to 16.8% of earned income. Of course, there are many deductions and tax credits that you can apply for, which is why it is crucial to seek expert tax advice in 2021.
Access Sound Financial Planning Advice for 2021
Understanding your taxation requirements is essential for sound financial planning in the year ahead. For more expert advice on getting your finances on track in the year ahead, make sure to consult our expertly-curated Finance section for insider advice on budgeting, investing, and more.