California Officially Opens State Tax Season

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For Immediate Release

01.08.2015

Sacramento — The Franchise Tax Board (FTB) today announced it is now accepting 2014 state tax returns.

What’s New This Year - Tax Law Changes

Mandatory E-Filing of Business Entity Returns

Business taxpayers using tax preparation software must file electronically beginning on January 1, 2015. This requirement applies to both original and amended returns.

“Business taxpayers” includes all corporations (including tax-exempt organizations), partnerships, and LLCs. However, the requirement does not apply to exempt organizations filing an unrelated business income tax return.

Businesses may annually request a waiver from the e-filing requirements due to:

  • Technology constraints if compliance would result in undue financial burden; or
  • Reasonable cause.

FTB will not impose penalties for three years. Beginning with the 2017 taxable year, a business that fails to electronically file its return will be subject to penalties equal to $100 for the initial failure and $500 for each subsequent failure.

New FTB Form for Like-Kind Exchanges

For those taxpayers exchanging property, there is a new annual information reporting requirement for what is commonly known as a “like-kind” exchange. In a like-kind exchange, someone defers gain or loss recognition by exchanging property versus selling it. The new reporting requirement applies when a property located in California is exchanged for property located outside California.

FTB Form 3840, California Like-Kind Exchanges, must be filed in the year which the like-kind exchange is completed and each subsequent year that the gain or loss is deferred. For tax year 2014, only exchanges of real property are required to be reported.

Voluntary Contributions

Taxpayers can contribute to one or more charitable causes directly from the state tax form. New on the 2014 tax return are the:

  • California Senior Legislature Fund - provides additional funding to support ongoing activities of older persons.
  • Habitat for Humanity Fund- supports building affordable housing in California.
  • California Sexual Violence Victim Services Fund- provides additional funding for the California Coalition Against Sexual Assault to support the services of California’s rape crisis centers for victims of rape and sexual assault.

See FTB tax forms for a complete listing of available charities go to ftb.ca.gov and search for Voluntary Contributions for more information.

College Access Tax Credit Fund

This credit is available to individuals and businesses who make cash contributions to the College Access Tax Credit (CATC) Fund administered by California Educational Facilities Authority (CEFA). The contribution goes to fund the Cal Grant B program, which provides money for books and living expenses to low-income college students.

 The amount of the credit for each taxable year calculated as:

  • 60% of the amount contributed for the 2014 taxable year;
  • 55% of the amount contributed for the 2015 taxable year; and
  • 50% of the amount contributed for the 2016 taxable year.

Donors must request an allocation of the credit from the California Educational Facilities Authority (CEFA) before they make the donation. CEFA will issue the donor a certificate upon receipt of the funds. More information on making a CATC contribution is available on the State Treasurer’s website at treasurer.ca.gov or our website at ftb.ca.gov and search for College Access Tax Credit.

Standard Deduction and Exemption Credit Increases

The standard deduction for single or filing separately tax statuses increased to $3,992. For joint, surviving spouse or head of household filers, it increased to $7,984.

The dependent exemption credit increased to $333 per dependent. The personal exemption amount for single, filing separately, and head of household filers increased to $108. For joint or surviving spouses, it increased to $216.

What’s New This Year- Services

Ask a Legal Expert

This online service allows taxpayers or their representatives to submit basic tax questions directly to FTB’s Legal Division via email.  The questions should pertain to requests to explain, interpret, or apply a state tax law. To use this service, go to ftb.ca.gov and search for Ask a Legal Expert.

This service cannot help with account resolution issues. Questions related to specific cases that are under audit, protest, appeal, settlement, or litigation should be directed to the staff person assigned to the case.

Direct Deposit Option for “ScholarShare”

New this year is direct deposit for “ScholarShare,” the state’s 529 college investment plan. The program enables Californians to save for college by putting money in tax-advantaged investments. Taxpayers can request that FTB electronically deposit their refunds into two accounts. This encourages taxpayers to split their refunds to save some of their money. Refunds can be split into the following accounts:

  • Checking
  • Savings
  • IRA
  • Money market
  • ScholarShare

Taxpayers should make sure their financial institutions accept deposits into the accounts selected for direct deposit.

Business Credit Card Payment Option

Now both business and individual taxpayers can use credit cards to pay state income taxes such as estimated tax payments, extension payments, and any amount due on current year or prior year tax returns.

Taxpayers can make their online payments using FTB’s Web Pay or by credit card through Official Payments Corporation. A convenience fee is charged by Official Payments Corporation.

New Mobile Website Design

FTB has optimized its mobile website to fit any size device (desktop, tablet and smartphone browsers). The new website will replace FTB’s limited mobile only website and give mobile users access to all the same content as the desktop version, no matter where they are or what device they are using.

Free Do-it-Yourself Services

FTB encourages taxpayers and practitioners to explore its many self-service applications available through FTB's website.

CalFile makes filing easier - CalFile is FTB’s free, easy-to-use e-file option available to more than 6.4 million taxpayers. CalFile accepts taxpayers with income of up to $352,830, itemized deductions, and some tax credits.

CalFile guides taxpayers through a simple question and answer process. It takes about 15-30 minutes to complete. CalFile offers convenient features to make it easier to use including: importing the taxpayer’s information to the tax return and the ability to save information and come back later to finish the return. Taxpayers can also file the current year 2014 state income tax return as well as the previous state tax returns for 2012 and 2013.

Visit FTB’s website at ftb.ca.gov to access CalFile.

MyFTB Account - Taxpayers can use this service to change a mailing address and get information about their: California wage and withholding information, estimated tax payments, balances due, or FTB-issued 1099 forms. Taxpayers and tax professionals must complete a one-time registration process.

Estimated tax payment schedule - For taxpayers who need to make quarterly estimate payments, the California schedule differs from federal. To avoid an estimate penalty, taxpayers must pay:

  • First quarter (April 15) 30 percent
  • Second quarter (June 15) 40 percent
  • Third quarter (September 15) 0 percent
  • Fourth quarter (January 15) 30 percent

Check Your Refund Status - After filing their 2014 tax return, taxpayers can use this service to see where their refund is. Generally, e-filed returns with refunds and requests for direct deposit are issued within 7-10 days. Mailed refund checks are sent within two weeks. Paper-filed returns take longer, up to 8-12 weeks depending on the time of year the return is filed. FTB also offers this service in Spanish.

Request a Monthly Payment Plan - FTB offers monthly installment payment plans to taxpayers experiencing a financial hardship. Taxpayers who owe $25,000 or less and can repay their balance owed within five years generally qualify. For qualifications and to sign up, go to ftb.ca.gov and search for installment agreement. Taxpayers can also apply by phone using FTB's Interactive Voice Response (IVR) system at 800.689.4776.

Get Answers to Frequently Asked Questions - Find answers to questions about various tax topics such as return filing requirements, tax credits, and the eligibility requirements for the Head of Household filing status online at ftb.ca.gov.

Try Live Chat - Live Chat lets taxpayers ask an FTB representative general tax questions and get help with FTB’s website.

Phone Service - FTB provides automated toll-free phone service at 800.338.0505. To speak with a customer service representative, FTB staffs its general toll-free phone line, 800.852.5711, from 7 a.m. to 5 p.m., weekdays excluding state holidays.

Field Offices - FTB has six regional field offices that provide walk-in service from 8 a.m. to 5 p.m., weekdays in Los Angeles, Oakland, Sacramento, San Diego, San Francisco, and Santa Ana. For directions, go to ftb.ca.gov and click on the Contact Us tab.

Services Available in Spanish- FTB offers many services in Spanish including forms, publications, refund status, and answers to frequently asked questions.

Tax Tips

Beware of Tax Scams

FTB hears from taxpayers all the time about scammers calling or emailing who claim to be from FTB. Taxpayers should be wary of theft ploys involving scammers attempting to mimic FTB to obtain access to their personal information or money. While FTB calls people who owe taxes, FTB will never ask for passwords or similar access information for credit cards, bank accounts, or other financial information. FTB agents never solicit payment by threatening incarceration and FTB does not have the ability to process funds from third-party issued debit cards or prepaid debit cards.

Taxpayers with questions about their account or who have never received a FTB billing notice, can verify their FTB account information by accessing MyFTB Account or by calling FTB directly at 800.852.5711.

Volunteer Income Tax Assistance

Starting in February, free tax help is available through the Volunteer Income Tax Assistance and Tax Counseling for the Elderly Programs (VITA/TCE). Trained volunteers at more than 1,000 sites throughout California provide free help to complete tax forms for low-income, senior, disabled, and non-English speaking persons who need to file simple federal and state tax returns.

Many military bases provide this service for the U.S. Armed Forces. For information on locations throughout California, go to ftb.ca.gov and click on the free filing assistance link.

Verify Your Tax Preparer

California has set strict standards for paid tax preparers. State law requires anyone who prepares tax returns for a fee to be either an attorney, certified public accountant (CPA), CTEC-registered tax preparer (CRTP) or enrolled agent (EA).

Use Tax

Taxpayers may owe use tax on purchases made from out-of-state or Internet sellers. Use tax can be reported on the California income tax return instead of filing a use tax return with the State Board of Equalization (BOE). Taxpayers can use a “look-up table to report their use tax obligations. The estimated amount of use tax due is based on the person’s adjusted gross income. For more details, visit the BOE’s website at boe.ca.gov.

Federal Earned Income Tax Credit (EITC)

This is a federal incentive for low-to-moderate income individuals and families that can be claimed on your federal tax return. Taxpayers earning less than $52,427 can qualify for a “refundable” credit that can total up to $6,143. “Refundable” means that taxpayers do not have to have a tax liability to get a refund check from the federal government. Taxpayers can check if they qualify by visiting the IRS website at irs.gov and searching for EITC Assistant. California has no comparable state credit.

The New Employment Credit

For taxable years beginning January 2014 through December 2020, the 2013 enacted New Employment Credit can be taken against corporate income and personal income taxes. The credit is available to qualified employers who do businesses in the Designated Geographic Area (DGA). Employers can determine whether a location is part of the DGA by using this online searchable map.

The credit can be claimed by employers who file timely, hire qualified full-time employees and have a net increase in full-time jobs.

Very Important: Businesses that want to claim this credit must request a “tentative credit reservation” with FTB within 30 days of completing their Employment Development Department New Hire Reporting requirement.

For more information, go to ftb.ca.gov and search for New Employment Credit.

Subscriptions

Taxpayers can stay on top of tax trends, new tax laws, and latest news, by enrolling in FTB’s free subscription service here.

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