Pay Thy Taxes: Important Tax Rules in California

If you want to live a free life, pay your taxes. If you want to reside in a safe country, pay your taxes. If you want to have a decent pension and other social securities, pay your taxes. So many things depend on taxes, yet they scare people due to their complexity. You might think that you are paying more and feel that it is unfair. On the other hand, you may be afraid of paying less and creating troubles for yourself out of lack of knowledge. Visit Asenaadvisors.com to know more about tax considerations.

No matter the reason, having as much information about taxes as possible will secure you a calm sleep and a clean conscience. Read on to find out how to do that!

Income Tax in California

    California is famous for being one of the wealthiest states in America. Celebrities, high-end restaurants, and cafes, Hollywood, and gazillion businesses blossom here every day. The state itself flourishes due to the income tax all of these entities and people pay. Franchise Tax Board (FTB) is the government body responsible for collecting and evaluating those taxes.

It is your responsibility to pay your income tax to FTB, and the first step of doing that is knowing your status. It can be either single/ married (filing jointly or filing singly)/ head of household or qualifying widow/widower. After you are sure about your status, especially as a family member, you can use FTB and its website to help you fill out your income tax correctly.

Filing Income Tax Return

    You must file your income tax return even if you expect to get a refund for the money paid. Usually, you have to submit the filed return by April 15. As online has gained extreme popularity, mainly due to the stubborn pandemic, many ways of filing your tax returns have emerged. You can opt for CalFile, the specialized online filing option for California residents and non-resident taxpayers, but there are many other options.

It is also essential to know the extensions you can get based on family or life circumstances. Usually, military personnel is those who are entitled to specific extensions. If you are non-military and don’t need to pay any tax or the state owes you a tax refund, you can submit your filed return by October 15. Finally, if you live or travel abroad on those dates, a special 2-month extension can also apply. The point is never to withhold the submission, or penalties will knock on your finance door.

What to Avoid

    Speaking of penalties, you can forget about them if you know the deadlines and rules and regularly file your tax return. However, if your taxes remain unpaid for any reason, FTB is allowed to impose penalties based on the number of days the tax remains so. The penalty starts at 5%, and each consequent month 0.5 percent is added to that sum. The longer taxes stay unpaid, the more aggressive actions FTB is entitled to take. Well, it is your money, but you have to pay it to the state.

If You Do Business

Taxes apply to everyone who does business in California. Regardless of being a resident or non-resident, you can’t avoid paying taxes. In Californian terms, FTB defines doing business as:

• Engaging in any transaction for the purpose of financial gain within California
• Are organized or commercially domiciled in California
• Your California sales, property, or payroll exceed certain amounts.

While you can find all of these on the website of FTB, one thing you can’t find there is experienced companies who provide tax planning services. Having one is the first go-to move, as they will ensure the stability and legality of your business. At the same time, you can fully immerse yourself in growing your business and entering more significant markets.

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