|
State Tax Exemptions. California allows certain owners and employees to apply for an exemption from specific state taxes. Here’s who’s eligible, along with the process for filing for exemption:
Sole Shareholder/Corporate Officer SDI Exclusion
To apply for the State Disability Insurance (SDI) exclusion, you need to fill out the Sole Shareholder/Corporate Officer Exclusion Statement and upload it to the Employment Development Department (EDD) website through your e-Services for Business login. The approval process can take a little while. If you’re a Mize payroll client, forward the approval letter from the EDD to your payroll processor and we’ll get you set up. The approval letter will indicate the quarter in which the exclusion begins. We can then refund any withheld SDI back to you on a subsequent check.
Family Employee Tax Exemptions
In addition, companies that are sole proprietors and partnerships can take advantage of tax exemptions for qualifying family members who are employed by their organization. The exemption applies to California unemployment insurance (UI), employment training tax (ETT), and state disability insurance (SDI). These employees would remain liable for personal income tax (PIT).
The employed family members covered under the exemption include:
Children under age 18 employed by their father or mother.
- Stepchildren, foster children, and sons- or daughters-in-law are not included in the exemption.
- Once the child reaches their 18th birthday, they no longer qualify for the exemption.
Employed family members who are not covered by this exemption include:
- Brother, sister, niece, nephew, aunt, uncle, stepparent, foster parent, father- or mother-in-law, or grandparent.
If the company is a partnership, the employed family member must meet the criteria for BOTH partners. For instance, if the partnership is made up of two spouses, their shared legal minor children would be exempt, but the child of one who is the stepchild of the other would not qualify. Also, if the spouse partnership employs one of their parents, that parent would not qualify since they are not a parent to both partners. However, if the partners are siblings and employ a parent, that parent would qualify since they are the parent of both partners.
If your sole proprietorship or partnership employs family members you believe would qualify for this exemption, please contact your Mize payroll processor. Provide the employee’s name and relationship along with your business entity type (sole proprietor or partnership). We will then evaluate to determine whether the employee meets the qualification and set up their tax status accordingly in the payroll system.
Rest Break Rules. This is not a new law, but a reminder that most California workers must receive the following breaks:
- An uninterrupted 30-minute unpaid meal break when working more than five hours in a day.
- An additional 30-minute unpaid meal break when working more than 12 hours in a day.
- A paid 10-minute rest period for every four hours worked.
More information from the California Department of Industrial Relations on meal breaks can be found here, and more information on rest periods/lactation accommodation can be found here.
| 
