Tax Considerations for California Residents

 The new tax law will prove beneficial for millions of Californians. However, there are also many who will receive a significant blow due to high property taxes and a reduction in the number of allowable deductions. Regardless, whether you stand to prosper or pay more tax, you should study the changes and meet with your tax professional to ensure you make the best possible decisions.
Tax Considerations
Property taxes: Many California residents who plan to itemize will need to consider there is now a $10,000 limit on state and local tax (SALT) deductions. In 2014, according to the non-partisan Tax Foundation, over six million California homeowners collectively reduced their taxes by $101 billion via this Federal tax break. Unfortunately, the new limit will negatively impact many affluent homeowners who previously benefited.
Business Costs: Unreimbursed business expenses, such as legal and accounting costs, as well as entertainment expenses and fees paid to managers or headhunters, are no longer deductible. Likewise, business club membership costs and sporting event deductions have been eliminated. You may need to think twice about purchasing season tickets to Lakers or Kings games for business entertainment purposes.
Home equity loans: No longer will you be able to deduct interest paid on a line of credit or home equity loan unless you spend the money on home improvements or buying a home.
Charitable deductions: You can still deduct charitable contributions; however, you must itemize your deductions to continue to take advantage of this deduction.
There is certainly good news, too. After this year, the penalty for not buying health insurance will be eliminated. The deduction for children has doubled, and those who do not need to itemize will enjoy a standard deduction of $12,000 for singles and $24,000 for married couples.
We urge everyone who has any questions concerning the new law to receive tax planning assistance from their tax professional. As a reminder, we offer our clients unlimited tax planning advice.
Professional Tax & Financial Services is located at 25124 Springfield Ct., Ste. 260, in Valencia. For more information, please call 661-259-1967 or 1-800-998-4829. You may also visit our tax services website at www.scvprotaxservices.com.