Transcript 2012 AARP CALIFORNIA - AARP Foundation Tax

California Supplement
to 2013 NTTC
Training Slides
California Volunteers
Make The Difference
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2013 California
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CA Filing Basics
Lesson 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
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CA Filing Basics
Lesson 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
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CA Filing Basics
Lesson 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 name
 Check
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the spouse box
2013 California
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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
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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)
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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!!
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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
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CA Income – Wages
Lesson 7
● Check box top of W2 input to take calc off
line 16
● Enter state wages as shown on W-2
8
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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
8
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CA Income Wages
● Enter state info as on W-2
Lesson 7
LOCKED
Enter Disability Insurance in SDI
literal box ONLY
Describe same as on W-2
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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)
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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
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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
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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
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CA Income –
Interest- Dividends
Lesson 8
● US obligation mutual fund – Dividend
Statement
● Use minus (-) and amount in State Adjust
columns
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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
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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 adjustment
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CA Income –
Interest- Dividends
Lesson 8
● Make sure CA Sch CA is right
Are line 8 and 9 correct or incorrect?
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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 #
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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
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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
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CA Capital Gains & Losses
Lesson 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)
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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
2012
2013
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CA Capital Gains & Losses
Lesson 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 #
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CA Retirement Income
Lesson 13
● Railroad Retirement, tier 2, non-taxable
to California
● Form 1099R – Check the Railroad
Retirement Box
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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 1005
Out of scope
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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
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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
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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 CA
Need adjustment on line 21, CA Sch CA
(540), addition to income, Column C
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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
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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”
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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
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CA Other Income
Lesson 18
● CA state lottery – NOT taxable for CA
 Use separate W-2G
 TaxWise makes the adjustment
CA
lottery
losses
Check
the box
on form
W-2G
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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
Automatic
Must input
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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
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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
OPTIONAL
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CA Credit for Child
& Dependent Care
Lesson 22
● Provider telephone number required
● Address where care actually occurred
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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
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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)
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CA Renter’s Credit
Lesson 26
• 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
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Direct Deposit
Lesson 30
CA Form 540 Pg 3
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
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CA Installment Agreement
Lesson 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
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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
OR
22-30
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CA Estimated Taxes
Lesson 32
● If balance due is >$500, and it’s
expected that 2013 will be the same,
avoid underpayment penalty
32-34

Increase withholding

Do or increase Estimated taxes
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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
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CA Quality Review
● Carefully review CA sch CA for federal –
CA differences

Is what’s there right?

Is anything missing?
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California
Questions?
Comments?
Thank you for volunteering!
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