California Increases Income Tax Witholding By 10%
California has come up with another “creative” way to get some money from its residents. First, I had to figure out how to redeem my California IOU. Now starting back on November 1st, the state increased the income tax withholding on regular wages by 10%. There is no actual accompanying tax increase, they are just looking for an interest-free loan from now to when you file your income taxes.
According to the Franchise Tax Board, previously a single taxpayer making $51,000 a year and claiming one withholding allowance would have had $40.58 a week withheld from his or her paycheck. After Nov. 1, withholding increased to $44.64 a week, an increase of $4.06. Taking an extra $20 a month from someone making $51,000 a year seems more annoying in principal than anything else.
If you want to “undo” this gimmick, you can increase the number of withholding exemptions you claim on form DE-4, Employee’s Withholding Allowance Certificate, from your payroll department. You can also increase the exemptions on your W-4 form as well, but that just decreases the amount of federal tax withheld.
Fool around with the calculator at PayCheckCity and see how changing the number of allowances changes things (I don’t know if they’ve updated their calculators to include this change, but you’ll get the general idea). Just be sure that you’re paying enough income taxes to avoid underpayment penalties.
A much more detailed (and long-winded) article can be found at SacBee.com. Thanks to reader Sharon for the heads up.
Share ThisRelated posts:
- Investing in California Municipal Bonds? Recently, I’ve been taking another look at investing in California...
- How To Redeem California IOUs (Registered Warrants) Back in July, the state of California started issuing what...
- How To Generate and Issue Your Own 1099-MISC Forms Did you as a small business pay another person or...
- E-File Your Federal Tax Return Extension For Free April 15th is only a month away, and you haven’t...
- Income Tax Preparation… My husband and I have always had fairly complicated taxes....
Filed under: Finance, Money Saving Ideas
