Tax Info You Need to Know


In 2019 CA Govenor signed AB5. Under AB5, most workers are presumed to be employees for purposes of the Labor Code, the Unemployment Insurance Code and for most wage orders of the Industiral Welfare Commission unless a hiring entity satisfies a three-factor test, referred to as the ABC test. This means that many workers previously classified as independent contractors (IC) are now employees under California law and you msut withhold CA income and payroll taxes and meet CA minimum wage and otertime requirements. The penalties for not complying with AB5 are severe. Employers are advised to consult with a Labor Attorney for direction about classification of their IC vs employees.


Health Care Coverage is required in CA beginning Jan 2020.  The penalty for not having health care in 2019 has been repealed on the Federal return and there is no State penalty for tax year 2019. BUT for 2020, CA has reinstated the penalty for no health insurance and that penalty can rise as high as 2.5% of household income, many thousands of dollars. Be sure to maintain your health insurance coverage in 2020 to avoid this costly CA tax penalty.