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I offer support for Quickbooks
If you are self-employed, you can protect yourself against a loss of income
Watch holding periods for stock transactions
Maintain log books for business use of your auto
Deductions that come with home ownership
If you have a 401K plan at work
Law Calls For Independent Contractor Reporting to EDD
Preparing for the tax season: If you’ve not been keeping track of income, deductions, stock transactions, and other tax-related activities during 2007, you should start to do so now. Waiting until the last minute complicates your life, adds stress to it, and makes it harder to efficiently prepare your returns at tax time.
Year-end tax planning: It is often advisable to review your projected tax picture for the year prior to the end of the year. There may be actions that can be taken to reduce your tax liabilities if the proper actions are taken in a timely manner.
Estimated taxes: If you are required to make quarterly estimated tax payments, now is a good time to review that situation to see if you’ve paid in proper amounts to avoid underpayment penalties. At this point, if you’ve paid in too little year-to-date, you may already be exposed to such penalties. However, reviewing that situation and making some catch up payments now can help minimize the penalties. State estimated tax prepayments prior to the end of the year may also reduce your federal taxes for the year.
Depreciable fixed assets: Make sure you are keeping a list of any fixed assets used in your trade or business. The list should include the description of the asset, date acquired and cost for inclusion in your returns.
If you are self-employed, you can protect yourself against a loss of income due to injury or illness with Disability Insurance Elective Coverage (DIEC) offered through the Employment Development Department, State of California. http://www.edd.ca.gov/taxrep/de231ec.pdf
Watch holding periods for stock transactions. Investments with gains held more than 12 months generally have a favorable federal maximum tax rate of 15%, rather than the regular federal tax rate which can be as high as 37.6%.
Maintain log books for business use of your auto or other vehicle throughout the year. On audit, without substantiation, your vehicle deductions may be disallowed. Contact me for a free Log Book.
Deductions that come with home ownership. One of the most common means for tax savings comes by owning your own home and the related mortgage interest and real estate tax deductions that come with home ownership. With proper credit and income, you might be able to purchase a home with only 3 or 5% down. Your real estate broker, banker and/or mortgage broker can give you full details.
If you have a 401K plan at work, maximize your savings into the plan if at all possible. In the long run, it will be one of the best things you can do towards saving for retirement, plus such deferrals reduce current taxes.
I offer support for Quickbooks. Tracking income and expenses, whether for personal or business, is a great way to easily prepare for annual tax filings. Quicken™ is great for personal purposes, and Quickbooks™ is a great business accounting software.
Independent Contractor Reporting to EDD
Beginning January 1, 2001 any business or government entity that must file a federal Form 1099-MISC for services received must also report specific independent contractor information to the Employment Development Department (EDD), State of California.
This reporting requirement is in addition to the current requirement to report new hires.
Businesses or government agencies must report this information within 20 days of entering into a contract for $600 or more, or, if there is no contract, within 20 days of when the aggregate payments reach $600. EDD will forward the data to state and local child support agencies to identify, for child support purposes, the income source of delinquent parents.
For further information, please see EDD's brochure on independent contractors at: http://www.edd.ca.gov/taxrep/de542B.pdf or contact EDD at 1-916-657-0529.