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Tax Filing Tips and Updates for Californians




As the California public, including thousands of small business owners in the state, prepare to file their 2013 tax returns, the National Association for the Self-Employed (NASE), a leading advocate and resource for the self-employed and micro-businesses, today released important tax tips, resources and updates to the tax code for filing accurate returns.

"Thousands of small business owners in California will have the opportunity to take the new standardized home-office tax deduction offered this year," said Keith Hall, President and CEO and National Tax Advisor for NASE.

"This is welcome news for over 50 percent of the small business community with home-based businesses who won't have to spend time filling out a complex IRS form to receive this new deduction. In addition, individuals and small businesses should educate themselves about the increased rates in the capital gains tax, Medicare rate and Net investment tax. You can never be too prepared. Now is the time to start gathering your documents and ensuring you know the changes and new adjustments to the tax code."

2013 TAX SEASON CHANGES AND ADJUSTMENTS:

  • A new streamlined, standard home office deduction is available for most small business owners
  • An Increased threshold for deducting medical expenses
  • Increase in tax rates for higher income taxpayers including an increase in the capital gains tax, the Medicare tax rate and a new Net Investment Income Tax
  • A permanent "patch" for the Alternative Minimum Tax (AMT)
  • The standard mileage rate for business use of an automobile has changed to 56.5 cents per mile
  • Limits for retirement plan contributions such as IRA's and 401(k) plans have increased

CALIFORNIA SMALL BUSINESS FAST FACTS*

  • 2,887,014 self-employed in California in 2011
    * 1,171,850 in Los Angeles-Long Beach-Santa Ana metro area
    * 146,282 in Sacramento--Arden-Arcade-Roseville metro area
    * 380,275 in San Francisco-Oakland-Fremont metro area
    *237,793 in San Diego-Carlsbad-San Marcos metro area
  • 545,345 micro-businesses in California (businesses with fewer than 10 employees) in 2010
  • $ 62,994,430 in annual revenue for self-employed in 2011
  • $16,382,007 in annual revenue for micro-businesses in 2010

TIPS FOR FILING:

  • You are not alone: use many of the countless NASE resources available to help you through your preparation
  • Get details straight from the source: bookmark the IRS website in order to get the details you need
  • Look for hidden deductions: many people overlook deductions that could save thousands of dollars
  • File Electronically to avoid math errors
  • Avoid shortcuts
  • If you just can't get it done, you can ask for more time

The new home office deduction option offers a new, simpler way for calculating the home office tax deduction, allowing small business owners and employees who work from home and who maintain a qualifying home office to deduct up to $1,500 per year. The new option allows qualified taxpayers to deduct annually $5 per square foot of home office space on up to 300 square feet, for as much as $1,500 in deductions. To take advantage of the new option, taxpayers will complete a much simpler version of the current 43-line form.

For more information on completing your 2013 tax documents, visit NASE's tax resource center or the IRS or the Small Business Administration (SBA).

*Latest information available from 2010 and 2011 provided by the U.S. Census Bureau Statistics on Nonemployer and U.S. Small Businesses