It is the holiday season; and, while that means different things for different people, there is one thing that all U.S. residents share in common this time of year: It is time to start thinking about tax returns.
California residents have to pay income tax at the state and federal levels. San Francisco residents also have to pay a 0.38% payroll tax (there are no other local income taxes in California). So, with 2020 right around the corner, how much do you need to be prepared to pay?
California’s Income Tax Brackets for 2019
California’s individual tax brackets apply to single taxpayers as well as married taxpayers and registered domestic partners who are filing separately. For spouses and registered domestic partners who file jointly, the income levels are simply doubled (this is the case with federal income taxes as well, with one exception). As published on Bankrate.com, California’s income tax brackets for 2019 are:
- 1% for taxable income up to $8,544
- 2% for taxable income between $8,545 and $20,255
- 4% for taxable income between $20,256 and $31,969
- 6% for taxable income between $31,970 and $44,377
- 8% for taxable income between $44,378 and $56,085
- 9.3% for taxable income between $56,086 and $286,492
- 10.3% for taxable income between $286,493 and $343,788
- 11.3% for taxable income between $343,789 and $572,980
- 12.3% for taxable income between $572,981 and $999,999
- 13.3% for taxable income of $1,000,000 or more (comprised of a 12.3% income tax rate and a 1% mental health services tax surcharge)
Federal Income Tax Brackets for 2019
At the federal level, the Internal Revenue Service (IRS) has adjusted the individual and joint income tax brackets for inflation for the 2019 tax year. The current federal income tax brackets are as follows:
- 10% for taxable income up to $9,700 ($19,400 for married couples filing jointly)
- 12% for taxable income over $9,700 ($19,400 for married couples filing jointly)
- 22% for taxable income over $39,475 ($78,950 for married couples filing jointly)
- 24% for taxable income over $84,200 ($168,400 for married couples filing jointly)
- 32% for taxable income over $160,725 ($321,450 for married couples filing jointly)
- 35% for taxable income over $204,100 ($408,200 for married couples filing jointly)
- 37% for taxable income over $510,300 ($612,350 for married couples filing jointly)
Despite being published in this manner, the federal tax brackets are marginal, just as they are in California. In other words, if you and your spouse earn $150,00 in taxable income and file jointly, you would pay federal income tax as follows:
- 12% on $19,400 of your joint income;
- 22% on your joint income between $19,401 and $78,950; and,
- 24% on your joint income between $78,951 and $150,000.
Accurately Calculating Your Taxable Income is Important
As you prepare to file your California and federal income tax returns, it is important to be certain that you are accurately reporting your taxable income and fully paying what you owe. Failing to report income from all sources, taking deductions for which you are ineligible, and otherwise evading your state and federal tax obligations – whether intentionally or unintentionally – can have severe consequences.
Using tax software or hiring a certified public accountant (CPA) to prepare your taxes can help you avoid mistakes. However, as the taxpayer, you are the one who is ultimately responsible for ensuring that you meet your state and federal income tax obligations.
RJS Law | Southern California’s Finest Tax Law Firm
The California tax attorneys at RJS law represent individuals and businesses in all local, state, and federal tax matters. If you have questions, or if you have been contacted by the California Franchise Tax Board or the IRS, we encourage you to call 619-595-1655 or contact us online for a complimentary consultation.