California Minimum Wage to Increase from $15.50 to $16 Per Hour on January 1, 2024.

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Effective January 1, 2024, the minimum wage for all California hourly employees increases to $16 per hour, up from $15.50 per hour that was effective January 1, 2023.

The federal minimum wage for 2024 is still $7.25, a rate unchanged since it became effective on July 24, 2009.

California minimum wage rates apply to Ventura County residents.

The City of Los Angeles minimum wage rate has been $16.78 per hour since July 1, 2023. Each year, the minimum wage is adjusted for inflation; the adjusted rate is announced on February 1st of each year and becomes effective on July 1st of each year. The city’s 2024 minimum wage rate increases to $17.28 effective July 1, 2024. See wagesla.lacity.org.

The County of Los Angeles minimum wage rate became $16.90 per hour effective July 1, 2023 and increases to $17.27 per hour (yes, one penny less than the City of Los Angeles minimum wage…who knew) starting July 1, 2024. See dcba.lacounty.gov/minimum-wage-for-businesses. This rate applies to employees in unincorporated areas of Los Angeles County.

But WAIT…you may have heard that hourly employees of national fast food eateries in California will receive minimum wage rate of $20 beginning April 1, 2024.

Minimum Wage of National Fast Food Chain Workers in Calfiornia to Increase to $20 on April 1, 2024

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Assembly Bill 1228 was signed by Governor Newsom on September 28, 2023. The bill authorizes, among other things, an increase in the minimum wage of employees at national fast food restaurants to $20 on April 1, 2024.

That’s a substantial increase in the current minimum wage for fast food workers, which as of January 1, 2024 will be $16 for California hourly employees (a 25% increase) and as of July 1, 2023 has been $16.90 for hourly employees in unincorporated Los Angeles County (an 18% increase). Ventura County hourly employees currently fall under the California minimum wage rate.

So does this mean that ALL fast food workers in California will automatically start earning at least $20 per hour next April? No. It applies to workers at “national fast food chains,” which is defined as “a set of limited-service restaurants consisting of more than 60 establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services, and which are primarily engaged in providing food and beverages for immediate consumption on or off premises where patrons generally order or select items and pay before consuming, with limited or no table service."

Bakeries gets a break. “Fast food restaurant” shall not include an establishment that on September 15, 2023, operates a bakery that produces for sale on the establishment’s premises bread, as defined under Part 136 of Subchapter B of Chapter I of Title 21 of the Code of Federal Regulations, so long as it continues to operate such a bakery. This exemption applies only where the establishment produces for sale bread as a stand-alone menu item, and does not apply if the bread is available for sale solely as part of another menu item."

AB 1228 goes on to state that the hourly minimum wage may increase annually by the lesser of 3.5% or inflation over the the most recent July 1 to June 30 period.

So some additional questions come to mind:

  1. If a chain has 60+ establishments but they are only based in California, does this represent a “national fast food chain” under AB 1228? My suspicion is yes.

  2. How will AB 1228 impact fast food eateries with 59 or less locations? Why would someone want to continue earning $15.50 at a smaller chain when they could work at Taco Bell or Burger King and earn $20? It would seem that although the law is written for larger chains, clearly it will impact all fast food eateries in the state.

  3. How will AB 1228 impact other minimum wage jobs? As with smaller eateries, it would seem that all minimum wage jobs will be indirectly impacted by AB 1228. A $4 per hour difference between entry level fast food jobs and other minimum wage jobs is significant.

Read the entire bill at https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1228.

Tax Breaks to Pay For College

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Section 529 plans give taxpayers the ability to invest for college and use the funds for college expenses at some point in the future tax-free.

Do you get a tax deduction for contributions to 529 plans? Not on the federal return. Your tax savings comes in the future, as any income generated by the investments made can be distributed tax-free in the future, as long as they are used for qualified educational purposes (defined below).

Some states do offer a tax deduction or tax credit on all or a portion of contributions you make to 529 plans. However, California (along with Kentucky, North Carolina, Delaware, New Jersey and Maine) do not offer such deductions or credits. That said, California does conform to federal law in that distributions used for qualified purposes are not taxed.

What are “qualified” uses of 529 plan funds? Tuition, room and board*, books, supplies, fees and computers, software and internet access

*Room and board includes the cost of housing and a meal plan at a college or university, be it on campus or off campus. However, the allowable amount under a 529 plan cannot exceed what the school’s published “cost of attendance” is. You can typically find this on a university’s website.

You have to be enrolled in school at least half-time to qualify to use 529 plan funds.

Expenses that do NOT qualify for reimbursement under a 529 Plan include travel expenses, health insurance and personal living expenses.

There are no income limits for funding the plan accounts.

What is the maximum you can put into a 529 plan? The California Scholarshare plan has an overall maximum account balance limit of $529,000, which applies to all accounts opened for a beneficiary. See www.scholarshare529.com for more information.

Can grandparents and other relatives contribute to my kids’ 529 plans? Absolutely! They do not get any tax benefits for these contributions and they are considered to be gifts*, but like with other contributions, they grow tax free, as long as the funds are eventually used for college or even a trade school or vocational school, as long as that school is eligible to participate in student aid programs offered by the Department of Education.

*The gift tax exclusion in 2023 is $17,000, up from $16,000 in 2022. That means you can give up to $17,000 per person without filing a federal gift tax return (IRS Form 709).

What happens if I can’t use the money in a 529 plan? First off, you can transfer funds from one kid’s 529 plan to another’s if you need to. That said, if you are unable to use the funds for qualified education, you can always take the money out and pay taxes on the earnings, plus a 10% penalty. And there are certain exceptions to the penalty too.

American Opportunity Credit

The American Opportunity Credit (AOC) can provide tax credits of up to $2,500 per student for the first 4 years of college. You cannot claim it for more than 4 years.

Up to 40% of the credit is refundable; the other 60% must be applied against your tax liability. The maximum credits is derived as follows: 100% of the first $2,000 in qualified expenses and 25% of the next $2,000 of qualified expenses.

Qualified expenses for the AOC includes tuition, books and fees, but DOES NOT include room and board that is allowed to be paid with 529 plan funds.

The challenge with this credit is that it phases out for single taxpayers with modified adjusted gross income between $80,000 and $90,000 and for married taxpayers, $160,000 and $180,000. If this is the case, something to consider for tax planning purposes is for the taxpayer to NOT claim the student as a dependent on their return (even if entitled to), and let the student claim the AOC credit.

Lifetime Learning Credit

If you have already used 4 years of AOC credit, you may qualify for the Lifetime Learning Credit (LLC), which has no limit on the number of years to claim the credit. However, there are even lower income phaseout levels for the LLC, phasing out between $59,000 and $69,000 in modified adjusted gross income for single and $118,000 to $138,000 for married taxpayers.

Additionally, the LLC is not a refundable credit. If you don’t owe taxes, you won’t be able to use the credit. The credit is calculated at 20% of the first $10,000 in qualified education expenses. Consistent with the AOC, the student can claim the credit if the parent does not claim the student on their tax return. However, if the student owes no taxes, there’s no use to this credit.

Qualified expenses for the LLC are the same as for the AOC, except course material expenses MUST be paid to the university as a condition of enrollment.

Scholarships

Keep in mind that any scholarships and grants received must be applied against the tuition and other expenses incurred. In other words, you cannot use 529 plan funds or obtain a education tax credit on expenses paid for with scholarship funds. That would be double dipping!

Speaking of paying for college, HERE IS A LINK to an article on how to complete a FAFSA form.

Eateries That Opened in the Second Half of 2023 and are Coming Soon to the Conejo Valley and Greater Ventura County

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Some of the new eateries in the conejo valley area that opened since july 2023.

We’re down to the final home stretch of 2023 and we’ve seen, as always, numerous changes in the local eatery landscape in the Conejo Valley and adjacent areas. Here’s what we’ve seen since July.

New Eateries That Opened in the Second Half of 2023

Eateries That Anticipate Opening Soon

Flashback to 1923: $400 an Acre for Lots in "Thousand Oaks" - A City in the Beginning

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In the spring of 1923, Morton D. Harris & Co. was selling 2 1/2 to 5 acre ranches at $400 per acre in "Thousand Oaks," a "city" in the beginning - the liveliest spot on the "Ventura Blvd." "Wonderful business opportunities...chicken and turkey ranches, grapes, fruit and berry tracts. Extensive water system now being installed. Good roads are being completed. And soon, yes, electric lights! Get these lots now for just 10% down and 2% per month!

According to the late Pat Allen, historian for the city, mostly farmers lived in the Conejo Valley in 1922.  The 2,200 acre Crowley Ranch was sold and subdivided and lots were sold for $1,000. As lots sold and the population grew, developers held a contest to name the new village. Sixteen year old Bobby Harrington entered the name "Thousand Oaks." He won the prize and the rest is history.

Thousand Oaks became a subdivision of Ventura County on May 1, 1923, as recorded by the County Recorder. Thousand Oaks was incorporated as a city on October 7, 1964.

Should I Start Collecting Social Security Benefits Before Reaching Full Retirement Age?

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Full Retirement Age (FRA) was 65 for many years. Congress passed a law in 1983 to gradually increase FRA to reflect increasing lifespans. FRA currently ranges from 65 for those born before 1943 to 67 for those born in 1960 or later. At what point should you start taking Social Security payments?

You can also start receiving Social Security benefits as early as age 62, but your monthly benefit would be reduced anywhere from 25 to 30% as a result. See www.ssa.gov/benefits/retirement/planner/agereduction.html for more information on how much you would receive, based on your year of birth.

You can also delay receiving Social Security beyond your FRA, up until age 70. The benefit to doing this is that your benefits are increased anywhere between 5.5% to 8% per year. See www.ssa.gov/benefits/retirement/planner/delayret.html for more information.

Let’s look at a simple example:

Conejo Joe was born in 1960 and thus turned 62 in 2022. His FRA is 67. His full retirement benefit is, say, $1,000 per month. If he chooses to start receiving payments at age 62, they would be reduced by 30%, to $700 per month. If he chooses to delay receiving benefits until age 70, they would increase by 8% per year over 3 years, to $1240 per month (ignoring increases for inflation).

If Conejo Joe started receiving $700 per month at age 62, by the time he reaches age 70 he would have received $58,800 (ignoring inflation increases). If he waited until age 70, he would receive $1240 per month, or $540 per month more than starting benefits at age 62. It would take him about 9 years to make up the gap.

But if Conejo Joe had other income or continued working at age 62, up to 85% of those $700 per month Social Security payments could be taxed at the federal level (most states, including California, do not tax Social Security benefits). Those taxes should be factored into the decision as to whether he should delay receiving benefits.

If Conejo Joe started taking Social Security at age 67, he would receive $1,000 per month. So by the time he reaches age 70, he would have received total payments of $36,000 (again, ignoring inflation). Had he waited until age 70, he would receive $1240 per month, or $240 more than the FRA benefits he received for the last three years. It would take him 12 1/2 years to make up the $36,000 gap. So if he anticipates living until at least age 82 1/2, in theory it makes sense to wait until age 70 to collect benefits, if possible.

Everyone’s situation is different. Some folks really need the payments early. Others can wait because they are still working. Visit www.ssa.gov for more information and talk to your financial planner and/or CPA for guidance.

One final point. The Social Security Administration says “If you decide to delay your benefits until after age 65, you should still apply for Medicare benefits within three months of your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) and prescription drug coverage (Part D) may cost you more money.

Did You Know That Six Streets at the Thousand Oaks Auto Mall are Named After Luxury Brands

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Thousand Oaks Auto Center (now Auto Mall) ad from the early to mid 1960s.

Thousand Oaks Auto Center (now Auto Mall) ad from the early to mid 1960s.

The Thousand Oaks Auto Center (now Auto Mall) opened in 1967, making it one of the oldest auto malls in the country. Currently (2023), 29 brands are sold at the mall.

Did you know...that there are five streets running roughly north/south in the Auto Mall between Thousand Oaks Blvd and Auto Mall Drive that are named after five previous luxury brands? The five streets, from west to east, are as follows:

Auburn Ave - Luxury brand sold from 1900 to 1937.

Marmon Ave - Luxury brand sold from 1902 to 1933 (Marmon Motor Co build the first Indianapolis 500 winning car in 1911).

Cord Ave - Luxury brand sold in 1929-1932 and 1936-1937.

Pierce Arrow Ave - Luxury brand sold 1901 to 1938.(Its firs car in 1901 was a single-cylinder, two-speed no-reverse car called Motorette.

Packard Circle - Luxury brand sold from 1899 to 1956.

There's also Duesenberg Drive, which connects to Auto Mall Drive on the north, to Hillcrest. Luxury brand sold from 1913 to 1937.

T.O. Auto Mall website is at www.toautomall.info