WHAT ARE THE IRS 2018 PERSONAL INCOME TAX RATES?

2018 IRS Income Tax Rate Table and IRS Filing Status

Tax Rate Unmarried Individuals Heads of Households Married Filing Jointly and Surviving Spouses Married Filing Separately
10% $0 – $9,525 $0 – $13,600 $0 – $19,050 $0 – $9,525
12% $9,525 – $38,700 $13,600 – $51,800 $19,050 – $77,400 $9,525 – $38,700
22% $38,700 – $82,500 $51,800 – $82,500 $77,400 – $165,000 $38,700 – $82,500
24% $82,500 – $157,500 $82,500 – $157,500 $165,000 – $315,000 $82,500 – $157,500
32% $157,500 – $200,000 $157,500 – $200,000 $315,000 – $400,000 $157,500 – $200,000
35% $200,000 – $500,000 $200,000 – $500,000 $400,000 – $600,000 $200,000 – $300,000
37% over $500,000 over $500,000 over $600,000 over $300,000

2018 IRS Standard Deduction by IRS Filing Status

Unmarried Individuals Heads of Households Married Filing Jointly and Surviving Spouses Married Filing Separately
$12,000 $18,000 $24,400 $12,000

California’s Sales Tax will Decrease January 1, 2017

 

On January 1, 2017, the statewide sales and use tax rate will decrease one quarter of one percent (0.25%).  The decrease in the statewide rate is effective for all cities and counties in California.  Sales tax is comprised of the statewide sales and use tax rate of 7.25 percent plus any district tax.  For most of Orange County California the the new sales tax is 7.75 percent down from 8.00 percent.

Most of Orange County is a full 1.00 percent or more less than Los Angeles County.

Why is the sales and use tax rate decreasing?  Proposition 30, The Schools and Local Public Safety Protection Act of 2012 that was approved by California voters in November 2012 to temporarily increase the sales and use tax by 0.25 percent expires December 31, 2016.

A retailer who continues to charge and collect the higher statewide sales and use tax rate after January 1, 2017, must either refund the excess tax collected to their customer or pay the excess tax to the Board of Equalization (BOE).  You may not keep it.

List of Orange County Sales Tax Rates as of January 1, 2017.

Counties Rate Location
  Orange   7.750 %   Aliso Viejo*
  Orange   7.750 %   Anaheim*
  Orange   7.750 %   Atwood
  Orange   7.750 %   Balboa (Newport Beach*)
  Orange   7.750 %   Balboa Island (Newport Beach*)
  Orange   7.750 %   Ballroad
  Orange   7.750 %   Bolsa
  Orange   7.750 %   Brea*
  Orange   7.750 %   Brookhurst Center
  Orange   7.750 %   Buena Park*
  Orange   7.750 %   Capistrano Beach (Dana Point*)
  Orange   7.750 %   Corona Del Mar (Newport Beach*)
  Orange   7.750 %   Costa Mesa*
  Orange   7.750 %   Coto De Caza
  Orange   7.750 %   Cowan Heights
  Orange   7.750 %   Dana Point*
  Orange   7.750 %   East Irvine (Irvine*)
  Orange   7.750 %   El Modena
  Orange   7.750 %   El Toro (Lake Forest*)
  Orange   7.750 %   El Toro M.C.A.S.
  Orange   7.750 %   Foothill Ranch
  Orange   7.750 %   Fountain Valley*
  Orange   7.750 %   Fullerton*
  Orange   7.750 %   Garden Grove*
  Orange   7.750 %   Huntington
  Orange   7.750 %   Huntington Beach*
  Orange   7.750 %   Irvine*
  Orange   8.250 %   La Habra*
  Orange   7.750 %   La Palma*
  Orange   7.750 %   Ladera Ranch
  Orange   7.750 %   Laguna Beach*
  Orange   7.750 %   Laguna Hills*
  Orange   7.750 %   Laguna Niguel*
  Orange   7.750 %   Laguna Woods*
  Orange   7.750 %   Lake Forest*
  Orange   7.750 %   Leisure World
  Orange   7.750 %   Leisure World (Seal Beach*)
  Orange   7.750 %   Los Alamitos*
  Orange   7.750 %   Mariner
  Orange   7.750 %   Midway City
  Orange   7.750 %   Mission Viejo*
  Orange   7.750 %   Monarch Beach (Dana Point*)
  Orange   7.750 %   Newport Beach*
  Orange   7.750 %   Orange*
  Orange   7.750 %   Placentia*
  Orange   7.750 %   Rancho Santa Margarita*
  Orange   7.750 %   Rossmoor
  Orange   7.750 %   San Clemente*
  Orange   7.750 %   San Juan Capistrano*
  Orange   7.750 %   San Juan Plaza (San Juan Capistrano*)
  Orange   7.750 %   Santa Ana*
  Orange   7.750 %   Seal Beach*
  Orange   7.750 %   Silverado Canyon
  Orange   7.750 %   South Laguna (Laguna Beach*)
  Orange   8.750 %   Stanton*
  Orange   7.750 %   Sunset Beach
  Orange   7.750 %   Surfside (Seal Beach*)
  Orange   7.750 %   Trabuco Canyon
  Orange   7.750 %   Tustin*
  Orange   7.750 %   University Park (Irvine*)
  Orange   7.750 %   Villa Park*
  Orange   7.750 %   Westminster*
  Orange   7.750 %   Yorba Linda*
  Orange   7.750 %   Cypress*

(Note:*” next to city indicates incorporated city)
Obtained from California State Board of Equalization website January 4, 2017.

To go to California State Board of Equalization website and check tax rates for different cities or counties click here.

Minimum CA LLC Franchise Tax

LLCs classified as disregarded entities or as partnerships are subject to an $800 annual tax.  The tax applies if the LLC does business in California or if the SOS accepts their Articles of Organization (LLC-1) or Application for Registration as a Foreign Limited Liability Company (LLC-5). LLCs organized or registered in California are subject to the annual tax even if they conduct no business in California.

Total Income Min Tax + Add’l Fee
$0 – 249,999 $800 $0
$250,000 – 499,999 $800 $900
$500,000 – 999,999 $800 $2,500
$1,000,000 – 4,999,999 $800 $6,000
$5,000,000+ $800 $11,790

The above chart is applicable for tax years 2001 to the present

LLCs are subject to an annual fee based on their total income “from all sources derived from or attributable to California”.  LLCs must estimate and pay the annual fee by the 15th day of the 6th month, of the current tax year. If the LLCs tax year ends prior to the 15th day of the 6th month, the LLC must pay the fee by the due date for filing its Form 568, Limited Liability See Company Return of income

Physical Presence Test to Qualify for Foreign Earned Income Exclusion

If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. To Qualify for the Foreign Earned Income Exclusion you must meet either the Bona Fide Residence Test or the Physical Presence Test.

PHYSICAL PRESENCE TEST

To meet the Physical Presence Test you must be physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. The 330 days do not have to be consecutive. Any U.S. citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction.

The physical presence test is based only on how long you stay in a foreign country or countries. This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad.

330 full days. Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. You can count days you spent abroad for any reason. You do not have to be in a foreign country only for employment purposes. You can be on vacation.

You do not meet the physical presence test if illness, family problems, a vacation, or your employer’s orders cause you to be present for less than the required amount of time.

Exception. You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest.

Full day. A full day is a period of 24 consecutive hours, beginning at midnight.

Travel. When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total.

Example. You leave the United States for France by air on June 10. You arrive in France at 9:00 a.m. on June 11. Your first full day of physical presence in France is June 12.

Passing over foreign country. If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States.

Example. You leave the United States by air at 9:30 a.m. on June 10 to travel to Kenya. You pass over western Africa at 11:00 p.m. on June 10 and arrive in Kenya at 12:30 a.m. on June 11. Your first full day in a foreign country is June 11.

Change of location. You can move about from one place to another in a foreign country or to another foreign country without losing full days. If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel.

Example 1. You leave Ireland by air at 11:00 p.m. on July 6 and arrive in Sweden at 5:00 a.m. on July 7. Your trip takes less than 24 hours and you lose no full days.

Example 2. You leave Norway by ship at 10:00 p.m. on July 6 and arrive in Portugal at 6:00 a.m. on July 8. Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. If you remain in Portugal, your next full day in a foreign country is July 9.

In United States while in transit. If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. You are treated as traveling over areas not within any foreign country.

Travel Log.  You must track all of your travel to and from the US and all foreign countries.  This will be needed to file your tax return.

Required Travel Log
Required Travel Log

Source:  IRS Publication 54

Am I Required to File IRS Form 1099 or Other Information Return?

Am I Required to File Form 1099 or Other Information Returns?
Here’s the short answer:
You are not required to file information return(s) including 1099’s if any of the following situations apply:

  • You are not engaged in a trade or business
  • You are engaged in a trade or business and the payment was made to another business that is incorporated, or the sum of all payments made to the person or unincorporated business is less than $600 in one tax year (unless the recipient is an attorney or law firm, see specific instructions for 1099-MISC for further details)

If You MUST File Form 1099’s, Here’s What You Need To Do:

  • Call Steve Mangione CPA your Orange County Accounting and Tax specialist.
  • We’ll answer your questions
  • We’ll print out the forms for you to mail to your vendors, (or we can mail)
  • We’ll e-file the Form 1096 Annual Summary and Transmittal of U.S. Information Returns to the IRS

What Is the Due Date for Mailing 1099’s to Vendors?

  • Form 1099-MISC is due to recipient on last day of January when you are reporting nonemployee compensation payments in box 7
  • Last day of February
  • File Form 1098 on paper by February 28, 2017, or March 31, 2017, if filing
    electronically through the FIRE system

NOTE: If the regular due date falls on a Saturday, Sunday, or legal holiday, file by the next business day.  A business day is any day that is not a Saturday, Sunday, or legal holiday.

If You Want To Create and Send Form 1099’s To Your Vendors and the Information Return Form 1096 To the IRS Yourself, Here’s What You Need To Do:

  1. Order the forms directly from the IRS for free. IRS Order Form
  2. Buy the forms from your local office supply store.  You’ll be able to print form on your inkjet or laser printer.  Some forms comes with free templates
    (TIP – Buy early they sell out early January)
  3. Request each vendor fill out IRS Form W-9
  4. Make sure you only include vendors that you paid over $600
  5. Certain vendors require you put the dollar amount in a different box and there are multiple 1099’s i.e. 1099-MISC | 1099-INT or the most common for trades and businesses
  6. You do not have to send a 1099 to corporations
  7. Fill out Form 1096 and mail to the IRS