TAX-AIDE California Supplement to 2013 NTTC Training Slides California Volunteers Make The...

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


● 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


● 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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE8

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

TAX-AIDE8

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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE


● 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

TAX-AIDE


● US obligation mutual fund – Dividend Statement

● Use minus (-) and amount in State Adjust columns

2013 California 16

TAX-AIDE


● Dividend income from California muni mutual fund is not taxable for federal or CA

● Use Exempt int div column

2013 California 17

TAX-AIDE


● 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

TAX-AIDE

Are line 8 and 9 correct or incorrect?


● Make sure CA Sch CA is right

2013 California 19

TAX-AIDE


● 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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE

CA Retirement Income Lesson 13

● Railroad Retirement, tier 2, non-taxable to California

● Form 1099R – Check the Railroad Retirement Box

2013 California 26

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE

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

TAX-AIDE


● 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

TAX-AIDE


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

TAX-AIDE


Foreign social security not taxed by federal, taxed by CA●Enter amount NOT taxed by federal (not 100%) as an “addition”

2013 California 32

TAX-AIDE

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

TAX-AIDE

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


● All care must be provided in CA

● Unearned income other funds not required to be input – F3 to clear red

2013 California 37

OPTIONAL

TAX-AIDE


● Provider telephone number required

● Address where care actually occurred

2013 California 38

TAX-AIDE

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


● 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

TAX-AIDE

• 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


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

TAX-AIDE

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

TAX-AIDE

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

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