The Bill amends the definition of “gross income” in the California Personal Income Tax Law and California Corporation Tax Law to conform to Federal tax law. The Bill also allows eligible taxpayers to deduct expenses paid with forgiven PPP loans and EIDL funds for taxable years on or after January 1, 2019.
What are the deductions required by law?
Some mandatory payroll tax deductions that employers are required by law to withhold from an employee’s paycheck include: Federal income tax withholding. Social Security & Medicare taxes – also known as FICA taxes. State income tax withholding.
Does CA conform to federal PPP loan forgiveness?
California Partially Conforms to Federal PPP Loan Forgiveness, Expense Deductions. California Governor Gavin Newsom signed Assembly Bill 80 (AB 80) into law on April 29, 2021.
How does California conform to federal loan forgiveness rules?
California Conforms to Federal PPP Loan Forgiveness Rules. Governor Gavin Newsom has signed Assembly Bill 80, to amend the law. This will bring conformity to the federal treatment of PPP loan forgiveness and EIDL grants, with one important exception relating to reduction in gross receipts in the 2019-2020 taxable year.
Do you have to take payroll deductions in California?
Employees may agree to deductions that are made for their benefit, at least during their employment. The California Division of Labor Standards Enforcement will respect an employee’s voluntary agreement to repay a debt via payroll deductions, except from final pay.
What are the rules for PPP loan forgiveness in California?
Taxpayers must have a 25% reduction in gross receipts in any 2020 calendar quarter as compared to the comparable 2019 calendar quarter in order to deduct expenses paid with PPP loan forgiven amounts. If this reduction threshold is not met, the expenses cannot be deducted on the California tax return.
What do you need to know about wage deductions in California?
Authorized deductions are limited. Under the California Labor Code, employers can make deductions from employee wages if the deductions are: Required or “empowered” by state or federal law. Expressly authorized in writing by the employee to cover insurance premiums, or hospital or medical dues.
