INCLINE VILLAGE, Nev. - For your move to Nevada, that is.
For whatever reason, the California electorate decided to agree with Jerry Brown's Proposition 30 last week, and thus expressed approval to increase sales and use tax rates, not to mention personal income tax rates. With regard to the latter, taxpayers (except heads of households and married filing jointly taxpayers) are subject to a personal income tax rate of 10.3 percent for the portion of taxable income over $250,000, but not over $300,000; a rate of 11.3 percent for the portion of taxable income over $300,000, but not over $500,000, and a rate of 12.3 percent for the portion of taxable income over $500,000. These brackets for married filing jointly taxpayers are doubled.
And note that these brackets are effective RETROACTIVELY to January 1 of this year!
Time to call for the moving van.
And a reminder about the tax intricacies of life insurance came down from the Tax Court, recently, which reiterated that a taxpayer had taxable income when his life insurance policy lapsed with a loan outstanding.
Seems the taxpayer had purchased a life insurance policy through his employer, and initially paid his premiums via payroll deductions until he changed jobs and ceased paying.
The policy, however, had been issued with an automatic premium loan provision under which any premium left unpaid would automatically be paid out of the policy's cash value, thus creating a loan receivable from the policy holder.
When the policy eventually lapsed, the outstanding loan balance became gross income to the taxpayer.
The taxpayer argued that he never received any money, and thus shouldn't owe tax on funds that he never received.
And getting back to election news, that towering tax intellectual, Harry Reid, was heard to utter, last week, "The president campaigned around the country saying, 'We know what the problems are with this fiscal problem. We just need some revenue. That was the issue. The mandate was look at all the exit polls, look at all the polling, the vast majority of the American people, rich, poor, everybody agrees that the rich - richest of the rich have to help a little bit.'"
They do? We guess the fact that they already pack 90 percent or more of the freight just isn't enough.
We can only look forward to four years from now, when not only Obama but Reid will also go.
- CONSULT YOUR TAX ADVISOR - This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation. Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.