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| federal tax return on line 7, column B of Schedule CA. Besides the benefit of a less congested highway, California still offers more benefits in the form of tax savings. Isn’t this fabulous? |
| Qualified Stock Options (CQSOs) |
| When you own stock in a company, you become a stakeholder in such company in the home that someday you will get paid for your efforts. Getting paid in more stock is fine too, as long as you do get paid. Some companies give you the option to get paid with stock instead of a paycheck. When you report the income that you did not receive depends on when you received the option, when you exercise the option, or on when you sale the stock received. Getting paid in this manner is considered a stock option. There are statutory stock options and nonstatutory stock options. If you receive a statutory stock option, you normally don’t include any amount in your gross income when you receive or exercise your stock option. However, if you are granted a nonstatutory stock option, you may have to include the amount in income, but this would depend on whether the value of the option can be readily determined. If the option is traded on an established market then this should not be any problem. However, most nonstatutory stock options are not readily determinable so you must include in income the fair market value of the stock received when you exercise the option or when you sell the stock received. |
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If you received your qualified stock options that is issued on or after January 1, 1997 and before January 1, 2002, you can exclude the income from those stocks if the amount is $40,000 or less and your exercised options are not for more than 1,000 shares with a combined fair market value of less than $100,000 which is determined at the time the options are granted. If there is an amount included in federal income that qualifies for the California exclusion, enter it on line 7, column B of Schedule CA to exclude it from California taxable income. Investing in stock can be an extremely rewarding experience. It can also be another form of gambling for many. I am surprised it is not classified as gambling winnings in the tax code. |
| Earnings of American Indians |
| Native Americans have endured many prejudice situations. In a way it is good that Native Americans are also subject to taxation for federal tax purposes. At least if Native Americans pay taxes, hopefully the prejudice towards them will stop. Earnings of American Indians are subject to federal taxation and many of that taxation rules are specifically written for them. Federally recognized tribes are their own legal entities established similar to the way states are established. They are set up like states and are given rights similar to rights given to state entities. Therefore, similar to the residents of the states, the residents of the Indian tribes are liable for taxes just as other residents. Income received by Indians from reservations sources is usually taxable for federal tax purposes. However, California does not tax the income of tribal members who live in Indian reservations and who receive income from their tribal sources. Any income received for services performed by tribal members while living or being domiciled on their reservation is nontaxable for California tax purposes regardless of who paid it. If the earnings from a Native American are taxable by federal you must make them excludable by California by entering them on line 7, column B to exclude them from the total income reported to California. The earnings of American Indians are usually subject to federal taxation similarly to income of residents from the fifty U.S. states, but are usually not subject to California taxation and therefore it must be subtracted from your California gross income total. It is important to note that if the Native American is not domicile or residing in a reservation, he or she will owe California tax. In this case the income would be the same as the federal amount and just transfer over from the federal tax return to the California tax return. There are many rules in place for Native American when it comes to California taxation matters. California taxation of natives is based on whether the Native American lives in or outside of the reservation. |
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Clergy housing exclusion |
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| Revised: 07/09/15 |
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