A quarterly newsletter for taxpayers
from A.D. Singleton & Co.

CALIFORNIA TAXES

With the year-end already in sight, now is a good time to consider some California tax-planning points. Below are some of the key changes to California’s tax laws. Bear in mind, however, that current budget problems and an uncertain political situation could see today’s tax rules change tomorrow.

• Net operating losses (NOLs) are suspended for the 2003 taxable year. However, unless the California Legislature extends the suspension, NOLs will be back for the 2004 tax year. Planning Tip: If you have a net operating loss carryover into 2003, try to defer income until 2004 when the NOL carryover may be used to offset the income.
• The Teacher Retention Credit may be back, but slightly changed, for 2003 after a one-year suspension in 2002.
• California does not conform to the new federal Section 179 limitations that allow a deduction of up to $100,000 for assets placed in service during 2003. California’s limitation remains at $25,000.
• California does not conform to new rules giving favorable tax treatment for dividends or capital gains received on or after May 6, 2003. California dividends and capital gains are taxed at ordinary income rates.
• Federal rate reductions may throw more taxpayers into AMT (Alternative Minimum Tax). Planning Tip: Consider holding off paying California estimated tax until 2004 if you are likely to pay federal AMT in 2003.
• Planning Tip: Consider the federal and state impact of making year-end charitable contributions. The allowable amount for both California and federal purposes is based on federal AGI (Adjusted Gross Income). If you have a federal NOL you will have limited charitable contributions for state purposes also.
• California mandatory e-filing legislation has passed and all individual returns prepared by a professional preparer must be e-filed with few exceptions. You may sign a form stating you do not want your return e-filed. Of course, we will do it for you unless you opt not to e-file. Returns with forms that are not accepted by the Franchise Tax Board are exempt.
• The only tax increase so far is a tripling of the vehicle license fee (car tax). The car tax, however, is now the subject of a lawsuit, so it too may change.

We always keep up with the latest happenings that affect your tax situation, so call us if you have any questions.

What is a Nuisance Guarantee?

It is relief from anxiety!

If you have ever received a notice or been audited by the Internal Revenue Service or Franchise Tax Board, you know what a nuisance it can be - endless requests for explanations, clarification, and possibly several meetings with taxing authorities!

The General Accounting Office claims that half of all IRS correction notices sent out are “incorrect, unclear, unresponsive, or incomplete”. Our Nuisance Guarantee is designed to minimize the cost of that nuisance, and can be obtained for a small fee when you pick up your tax returns.

How does it work? You complete a tax organizer and we prepare your returns. If your return is selected for audit or other inquiry by the Internal Revenue Service or the Franchise Tax Board, and you have a Nuisance Guarantee for that return, we represent you up to the IRS appeals level, or FTB equivalent, at no cost to you.

Request one when you pick up your returns. A Nuisance Guarantee in hand leaves the Nuisance of tax notices up to us!

SAFEGUARDING YOUR IDENTITY

Identity theft is soaring!  According to the FTC (Federal Trade Commission), it strikes one in eight adults.  The FTC estimates that the cost of identity theft last year was $48 for business, and $5 billion for individuals. 

           Crooks steal personal information, open new accounts, rack up credit card bills in their names, and ruin credit ratings.  The vast majority of identity thefts still involve low-tech crime, such as stealing mail or Dumpster diving for sensitive documents thrown out in the trash.

           You can’t totally protect yourself from identity theft, but you can lower your risk by monitoring your accounts, checking your credit report regularly, and being careful about who sees your personal information.  To help safeguard you identity  - 

1. Don’t give your Social Security number, mother’s maiden name or account numbers to strangers who contact you, especially by phone, Internet or mail.
2. Know what time of month your bills arrive.  If late, call the creditor to reaffirm your billing address.
3. Guard your mail from theft.  Don’t leave outgoing mail in your mailbox.
4. Put passwords on your credit card, bank and phone accounts.
5. Minimize the amount of information a thief can steal.  Don't carry extra credit cards, your Social Security card, birth certificate or passport in your wallet or purse, unless needed.
6. Shred charge receipts, copies of credit applications, insurance forms, physician statements, bank checks and statements, expired charge cards and credit offers you get in the mail.
7. Check your credit report regularly.

For additional information on safeguarding your identity, or what to do if you suspect its theft, call us at 760-747-4605.

All information presented here is general in nature, and does not take into account your personal situation.  Please call us for information specific to your particular circumstances.