CA state taxes changes

I just got this email and haven't verified it yet but heads up because if it's true, I'm sure you'll be getting IOU's instead of refunds at the end of the year.

Sent: Wed, Aug 12, 2009 5:41 pm
Subject: important changes in our state taxes

I just wanted all of you to be aware of this increase in your withholding. You can talk to your employer and make any necessary changes if you wish to do so.

10% Increase in Estimated State Tax Withholdings

Starting this November, the state will require employers to withhold 10 percent more in state taxes from wage earners. The move is a permanent change that is expected to artificially inflate=2 0state revenue by $1.7 billion through June 2010 and help ease the state's immediate cash shortage. Technically, it's not considered a tax increase because workers will be able to get the money back when they file their tax returns. But accountants are advising people to consider increasing their exemptions next year in order to avoid overpaying tax es to the state. For example, the same couple earning $100,000 a year will have $5,433 taken out of their paychecks by the state over a 12-month period under the 10 percent accelerated withholding even though they really owe $4,939.

Individuals who file quarterly estimated income taxes, such as the self-employed or those who generate significant income from stock options and dividends, also must speed up their tax payments. Starting Jan. 1, 2010, the state will require them to pay 70 percent of their estimated taxes during the first six months of the calendar year, up from 60 percent. The move is intended to increase the amount of money collected during the final two quarters of the state's fiscal year, which runs from July 1 to June 30. Under the new quarterly schedule, tax filers making estimated payments will pay 30 percent in the first quarter, 40 percent in the second, nothing in the third and 30 percent in the fourth.&nbs p; It represents a permanent change from the current schedule for estimated tax payments (30 percent in the each of the first two quarters and 20 percent in each of the final two quarters).