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Happy August!  Hope everyone is managing to stay cool and getting ready for school to resume.  Mandy is enjoying her vacation in Great Brittan and is scheduled to return to the office August 5th. I'm sure she'll need a few days to catch up and recover so please be patient.  I have enjoyed working with her clients in her absence and hope to meet more of you!  The California budget was recently passed, bringing new tax benefits with it. Read on to learn more.

FTB Middle Class Tax Refund

California residents may be eligible for the Middle Class Tax Refund as part of the new state budget.  This is a one-time payment to provide relief to Californians.  If you are eligible, you will automatically receive a payment ranging from $400 to $1,050 for married filing joint taxpayers and $200 to $700 for all other taxpayers depending on their California AGI, and whether they claim any dependent credits. 

Payments will go out sometime between October 2022 and January 2023.  Payments will be via direct deposit or prepaid debit card (NO checks). These payments are excludable from California taxable income, and we expect these payments to be treated as any other state tax refund for federal purposes.

To see if you are eligible and how much your expected payment will be, go to the FTB website.

More PPP Conformity for California

AB 194 extends California's partial conformity to the federal treatment of Paycheck Protection Program loan forgiveness to apply to PPP loans approved after March 2021.  The previous 25% gross reduction threshold still applies to deduct expenses paid with these forgiven loans per AB 80. 

Taxpayers who already filed 2021 tax returns that included the PPP loan forgiveness as taxable cancelation of debt income should file amended returns.  If you received a PPP loan after March 31, 2021 and think this applies to your loan, please contact our office.

We found a new staff accountant!!!

We are very excited to announce the addition of our new staff accountant, Anuradha.  Anu has a Master of Business Administration in Finance with a minor in Human Resources from India and is currently pursuing her CPA license.  Before moving to the US in 2016, she worked for a steel company in India.  Anu most recently worked as a staff accountant for a firm in Yuba City but grew tired of the commute.  She loves to cook in her free time and is a quick learner.  She can also speak, write and read in three languages - English, Hindi and Punjabi!.  Anu is excited for the opportunity to further develop her skills and allow herself to grow her contribution to the company by utilizing her skills and experience.

Good News for K-12 Educators!

Beginning with the 2022 tax year, teachers and other educators will be able to deduct up to $300 of out-of-pocket classroom expenses as an above-the-line deduction.  This limit previously was $250 per year.  Additionally, the limit will adjust in future years by $50 increments based on inflation adjustments. 

This deduction is for K-12 educators who work 900 or more hours per school year in a classroom.  California does not allow these expenses as an above-the-line deduction.  Instead they are treated as other unreimbursed business expenses as miscellaneous itemized deductions subject to the 2% of AGI floor.

Don't Get Scammed

Several of our clients have recently brought in scam attempts for us to review.  One was a letter from a law firm in Canada claiming our client had inherited a tidy sum from a long lost relative.  This attorney would gladly help you claim the money if you agree to split it with them.  

The other was a letter from a lottery organization claiming to have run a contest for several large companies such as Walgreen's.  There were logos from many familiar business and it referred to the contests you can enter at the bottom of your receipt.  They also included a very legitimate looking check for about $4,000.  A quick google search showed the lottery company was located in Canada and that the address on the check was not for the company listed on the check.  They likely hoped our client would deposit the check and then they could obtain our client's banking information.

Lastly, there are several organizations that are sending out official tax form-like documents offering to assist with the completion of the Secretary of State Statement of Information.  They charge between $100 - 300 for this service while the filing fee is no more than $30 if you do it yourself.  Again, these look very official and may appear that you HAVE to use them rather than doing it yourself. 

Be sure to read your mail very carefully before giving out information. And remember, if something sounds too good to be true, it likely is!

 

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