Post on 24-Dec-2015
TAX-AIDE
TAX-AIDE
California Supplement to 2013 NTTC Training Slides
California Volunteers Make The Difference
2013 California 1
TAX-AIDE
CA Filing BasicsLesson 3
● Deceased Taxpayer or Spouse The executor / guardian information
must be entered on 540 Pg 1 Failure to complete the
executor/guardian information will cause an e-file reject
2013 California 2
TAX-AIDE
CA Filing BasicsLesson 3
● Deceased Taxpayer or Spouse CA 540 Pg 1 If the surviving spouse is filing the return,
enter the surviving spouse’s name/number If there is only a beneficiary (acting as an
executor), enter the beneficiary’s name/ number
2013 California 3
TAX-AIDE
CA Filing BasicsLesson 3
● Deceased Taxpayer or Spouse CA 540 Pg 1 Complete the decedent representative
information If filing as a surviving spouse, TaxWise
completes “Decedent Representative” with the survivor’s nameCheck the spouse box
2013 California 4
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CA Filing Status Lesson 4
California scope limitations
●Full year resident returns only
●Taxpayers employed in multiple states are out of scope
●Other state returns are out of scope
2013 California 5
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CA Filing Status Lesson 4
● The only time MFS is in scope Has not lived with spouse for entire year
or more Cannot locate spouse / no intention to
reconcile
● Files using own income only
(no splitting)
2013 California 6
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CA Head of Household Lesson 4
● Additional info required: CA form 4803e (2 pages)
● Make sure all TaxWise red fields are completed or cleared (F3)
● All 4803e forms are reviewed by FTB!!
2013 California 7
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CA Income - Wages Lesson 7
● W-2 box 1 and 16 can or should be different, e.g.:
W2, box 12 code W employer paid HSA contribution
Ride share benefits are not taxable for CA
2013 California 8
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CA Income – Wages Lesson 7
● Check box top of W2 input to take calc off line 16
2013 California 9
● Enter state wages as shown on W-2
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CA Income - Wages Lesson 7
● If state wages differ, enter the difference directly on CA CA pg 1 form as a subtraction or addition
● Can use a scratch pad to explain the difference or use Line 21 f
2013 California 10
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CA Income Wages Lesson 7
● Enter state info as on W-2
2013 California 11
Enter Disability Insurance in SDI literal box ONLY
Describe same as on W-2
LOCKED
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CA Disability
● CASDI or SDI – deductible as a state income tax on federal Sch A
● TaxWise handles correctly when CASDI is in literal box (we default) and amount is entered on that same line (a required field)
2013 California 12
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CA Income Wages Lesson 7
● Special situation – state / county paid in-home care All use same employer ID# Payer name changes – care recipient’s name TW employer database brings up last used
Change name and other employer information for each instance
● Note: If care provider is related, no social security or Medicare tax withheld Take calc off L 3, 4, 5 and 6
2013 California 13
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CA Income – Interest- Dividends Lesson 8
General CA tax rules:
●“US Bond” interest - 100% exempt
●“California” interest - 100% exempt
●Other than CA interest - 100% taxable for CA (mutual funds are often called “Municipals” without CA in the name)If documents say something different, follow the documents
2013 California 14
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CA Income – Interest- Dividends Lesson 8
● Interest income from US obligations is not taxable for CA Includes US bonds, T-Bills/notes, federal land or
home loan banks Does not include Fannie Mae or Freddie Mac
● Minus (-) & amount in state adjust columns
2013 California 15
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CA Income – Interest- Dividends Lesson 8
● US obligation mutual fund – Dividend Statement
● Use minus (-) and amount in State Adjust columns
2013 California 16
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CA Income – Interest- Dividends Lesson 8
● Dividend income from California muni mutual fund is not taxable for federal or CA
● Use Exempt int div column
2013 California 17
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CA Income – Interest- Dividends Lesson 8
● Interest income from states other than CA are taxable for CA (not taxed by federal)
● Exempt “E” for federal
● Taxable for CA: “+” state adjustment2013 California 18
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Are line 8 and 9 correct or incorrect?
CA Income – Interest- Dividends Lesson 8
● Make sure CA Sch CA is right
2013 California 19
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CA Income – Interest- Dividends Lesson 8
● Look for CA withholding on 1099 forms
● Must input directly on F 540, L 71 – “1099” Use scratch pad to detail payer’s name
and state ID #
2013 California 20
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CA State Tax Refund Lesson 9
● State tax refunds are not taxed by California Not even refunds from another state Because they were never deducted for
CA purposes
● TaxWise makes the adjustment
2013 California 21
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CA Business Income Lesson 11
● There should be no differences between federal and state returns filing an in-scope Schedule C Check the confirmation box at the top of CA
Sch C after the amounts have been verified To create a 2nd CA Sch C, click the “+” next
to the first CA Sch C
● For every federal Schedule C, there must be a corresponding CA Sch C
2013 California 22
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CA Capital Gains & LossesLesson 12
● CA Sch D Enter the capital loss carryover as a
positive number on line 6 There should be no difference between
federal and CA capital loss carryover for an in-scope return (usually)
2013 California 23
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20122013
2013
CA Capital Gains & Losses Lesson 12
● Capital loss carryover - CA Sch D
● Line 6 will be red if there’s a federal cap loss carryover
● Enter CA loss carryover as a positive number
2013 California 24
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CA Capital Gains & LossesLesson 12
● Look for CA withholding on 1099-B or 1099-S forms (or CA 592-B or 593)
● Must input directly on F 540, L 71 or L 73
● Use scratch pad to detail payer’s name and state ID #
2013 California 25
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CA Retirement Income Lesson 13
● Railroad Retirement, tier 2, non-taxable to California
● Form 1099R – Check the Railroad Retirement Box
2013 California 26
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CA Retirement Income Lesson 13
IRA basis difference●If a taxpayer or spouse contributed to an IRA in 1975, or 1982 through 1986 (or contributed to an IRA in those years and became a CA resident after 2002) ●CA basis > federal basis●The taxpayer must have records●Reference FTB Pub 1005Out of scope
2013 California 27
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CA Unemployment Compensation Lesson 16
● Unemployment shown on form 1099-G
● Paid Family Leave administered by the SDI program through EDD use form 1099-G
● Non-taxable for California
● TaxWise makes the adjustment
2013 California 28
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CA Social Security Lesson 17
US Social Security or Tier 1 Railroad Retirement
●Not taxable for CA Enter on TaxWise worksheet 1
●TaxWise makes the adjustment
2013 California 29
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CA Social Security Lesson 17
● Certain foreign social security is in scope Canadian Pension Plan (CPP) Quebec Pension Plan (QPP) Old Age Security (OAS) or German Social Security
● Taxed like US social security for federal● Fully taxed by CANeed adjustment on line 21, CA Sch CA
(540), addition to income, Column C
2013 California 30
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CA Social Security Lesson 17
Foreign social security not taxed by federal, taxed by CA
●Use amount NOT taxed by federal (not 100%)
●F1040 L 20 a/b: not taxed here $13,000 - $1,750 = $11,250
2013 California 31
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CA Social Security Lesson 17
Foreign social security not taxed by federal, taxed by CA●Enter amount NOT taxed by federal (not 100%) as an “addition”
2013 California 32
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CA Other Income Lesson 18
● Gambling income from CA state lottery Taxable for federal Exempt for CA
● Gambling losses on CA state lottery Deductible for federal (limited) Not deductible for CA
2013 California 33
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CA Other Income Lesson 18
● CA state lottery – NOT taxable for CA Use separate W-2G TaxWise makes the adjustment
2013 California 34
Check the box on form W-2G
CA lottery losses
TAX-AIDE
CA Itemized Deductions Lesson 21
Foreign income taxes deducted for federal are not allowed for CA – CA CA P2●TW brings forward amount from 1040 Sch A line 8●Enter foreign tax on line 39
2013 California 35
AutomaticMust input
TAX-AIDE
CA Credit for Child& Dependent Care Lesson 22
● CA credit is nonrefundable Care must be provided in CA
● CA form 3506 generated when federal 2441 is generated
● TaxWise carries federal information
● Go to and complete CA form 3506
2013 California 36
TAX-AIDE
CA Credit for Child& Dependent Care Lesson 22
● All care must be provided in CA
● Unearned income other funds not required to be input – F3 to clear red
2013 California 37
OPTIONAL
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CA Credit for Child& Dependent Care Lesson 22
● Provider telephone number required
● Address where care actually occurred
2013 California 38
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CA Renter’s Credit Lesson 26
● Go to CA 540 Pg 1 and check the box if renter’s credit may apply:
● Must have rented home in CA for at least 6 months
● Must have a tax liability Check “No” if no tax
2013 California 39
TAX-AIDE
CA Renter’s Credit Lesson 26
● Enter information on CA Rent wkt: Answer all questions CA address(es) rented during 2013 and
dates rented for all applicable months Landlord’s Name, Address, and Phone
(two out of three will work; taxpayer’s info if Landlord not known)
2013 California 40
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• Income limits• Paid rent for at least six
months in CA• Property was not exempt
from property tax• Did not claim homeowners
exemption
Exception for separated/ divorced taxpayers
Special rules for MFS (out of scope)
Must have landlord info
22-30
CA Renter’s Credit Lesson 26
2013 California 41
TAX-AIDE
Easiest method – federal and state refund direct deposit into same account
If different, requires bank account info data entry. TaxWise highlights red all required fields
22-30
Direct Deposit Lesson 30
2013 California 42
CA Form 540 Pg 3
TAX-AIDE
CA Installment AgreementLesson 30
● For taxpayers that cannot pay in full within 90 days
● CA Form 3567 (counterpart to fed 9465) Authorizes direct debit of monthly payment $34 set up fee
● More at www.ftb.ca.gov - Payment Options under the Popular Topics heading
● Web pay is an option
2013 California 43
TAX-AIDE22-30
CA Direct Debit Lesson 30
● Example of a federal refund/state balance due return CA 540 Pg 3
● Need to select how payment will be made● If EFT, enter date of scheduled payment, amount of
payment requested, bank routing, account number, and type of account
2013 California 44
OR
TAX-AIDE32-34
CA Estimated Taxes Lesson 32
● If balance due is >$500, and it’s expected that 2013 will be the same, avoid underpayment penalty Increase withholding Do or increase Estimated taxes
2013 California 45
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CA Wrap-Up Lesson 32
● Have taxpayer sign CA 8879 and keep with their tax records The site does not keep a copy
2013 California 46
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CA Quality Review
● Carefully review CA sch CA for federal – CA differences Is what’s there right? Is anything missing?
2013 California 47
TAX-AIDE
California
Questions?
Comments?
Thank you for volunteering!
2013 California 48