Schedule CA (540 and 540NR) May 2018 Tax News

Form change due to Federal Tax Reform

Federal H.R.1, Tax Cuts and Jobs Act, made changes to federal itemized deductions and the federal standard deduction amounts beginning with the 2018 tax year. These federal changes have significant impact to California Schedule CA (540 and 540NR), California Adjustments, and will require us to make major changes to the form.

FTB plans to update the 2018 Schedule CA (540 and 540NR) as a result of federal H.R.1. The planned changes to Schedule CA (540) are as follows:

• Schedule CA (540), Part II, Adjustments to Federal Itemized Deductions, will be reformatted with three columns similar to Schedule CA (540), Part I.
• Schedule CA (540), Part II will list line numbers to mirror federal Schedule A, Itemized Deductions.
• Schedule CA (540), Part II, Column A will be the federal amounts from federal Schedule A with Column B (subtractions) and Column C (additions) that will allow for state adjustments to federal amounts on each line.
• Schedule CA (540), Part II will have all three columns total at the bottom. Then the column totals will be combined into one subtotal amount.
• A new Part III will be added to Schedule CA (540) for California only deductions and for those deductions expected to be removed from federal Schedule A but still deductible for California such as job expenses and miscellaneous itemized deductions.

Schedule CA (540NR), Part III, Adjustments to Federal Itemized Deductions, will have similar changes mentioned above for Schedule CA (540), Part II.

The main benefit of these changes puts the entire form in a consistent format while allowing the taxpayer to easily see all California adjustments made to each federal line items listed on the form.

Our revised Schedule CA is still under development, we would like your feedback on our planned changes. Send your comments directly to us on our website at Tax Form Improvement Suggestions, by May 31, 2018.