Changes to State’s College Access Tax Credit Remove Tentative Minimum Tax Limit and Extends Credit to 2017

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For Immediate Release

08.20.2015

Sacramento — Recent legislative changes have removed the restriction in the College Access Tax Credit (CATC) that prevented some taxpayers from using the credit against tentative minimum tax, the Franchise Tax Board (FTB) announced.

Senate Bill 81 allows taxpayers claiming the CATC to use the credit against the tentative minimum tax for the 2014 tax year and later years. SB 81 also extends the credit to include the 2017 tax year.

The CATC is available to individuals and businesses that contribute to the College Access Tax Credit Fund, administered by the California Educational Facilities Authority. Contributions fund the Cal Grant B program, which allows low-income college students to pay for books and living expenses.

Prior to the legislation, some taxpayers who claimed the credit on 2014 tax returns were unable to use the credit against their full tax liability due to the tentative minimum tax credit limitation. Many tax credits allow taxpayers to offset their regular tax, but not to an amount less than the tentative minimum tax. The new legislation permits taxpayers to use the CATC to offset the tentative minimum tax, including taxpayers who have already filed their 2014 returns. Any unused credit can still be carried over until exhausted, or for 6 years.

Taxpayers who already claimed the CATC on 2014 tax returns need take no action. FTB will contact these taxpayers to assist them with claiming any additional credit they may be eligible to use.

For more information, visit the State Treasurer’s website at treasurer.ca.gov or FTB’s website at ftb.ca.gov, and search for College Access Tax Credit.

FTB administers two of California's major tax programs: Personal Income Tax and the Corporation Tax. FTB also administers other non tax programs and delinquent debt collection functions, including delinquent vehicle registration debt collections on behalf of the Department of Motor Vehicles, and court–ordered debt. Annually, FTB’s tax programs collect more than 70 percent of the state’s general fund. For more information on other taxes and fees in California, visit taxes.ca.gov.

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