State Tax Filing Simplified For Many
Other News for State Income Taxpayers
Nearly a third of California taxpayers, including some families earning up to $200,000, can now file their income tax using the state's simplest tax form, the 540 2EZ. Also, this year via ReadyReturn the state will actually fill out a return for a select group of taxpayers, according to the Franchise Tax Board (FTB).
“Filling out a tax return is a pain in the neck,” stated State Controller and FTB Chair Steve Westly. "We're giving more taxpayers a chance to spare themselves the headaches that come with tax paperwork."
Changes made to the 540 2EZ now allow taxpayers with greater income amounts to use the form. The 540 2EZ has gained wide appeal for its simplicity in reducing the required lines of tax information needed and eliminating several math calculations. It is available to single or head of household taxpayers earning up to $100,000 and married taxpayers earning up to $200,000 who do not itemize deductions and have three or fewer dependents.
The FTB offers free e-file services through its own CalFile service. CalFile is the FTB's no cost, direct-to-government e-file program. It is available to taxpayers who file the 540 2EZ, 540A, and to a limited degree the 540 long form. CalFile accepts income of nearly $280,000, itemized deductions, and some tax credits. Many commercial e-file companies offer free e-file services to certain customers. Find CalFile and all other e-file services at www.ftb.ca.gov.
For a select group of people, the filing burden has been reduced. The FTB will actually do the tax return for them. The FTB is piloting ReadyReturn. Using W-2 information already collected by the state, the FTB is completing returns for taxpayers who file the simplest returns; that is, their only source of income and tax payments are from wages and withholding. Taxpayers will review the return for accuracy. If they agree with the information, they can sign the return and mail it or they can file the return online. If taxpayers disagree with the return they can simply correct it and then submit it, or if they do not want to use it, they can discard it.
Do Direct Deposit
Whether you e-file your return or mail it, you will get your tax refund quicker if you ask for Direct Deposit. The state controller will deposit your refund directly into your bank account. Taxpayers who e-file will get their money within seven days - and it is secure.
Tax Amnesty Coming Soon
California is offering a tax amnesty program from February 1 through March 31, 2005. Amnesty applies to income, franchise, sales, or use taxes for tax years 2002 and earlier. Taxpayers can avoid criminal prosecution and get most penalties and fees waived by paying the tax and interest. To learn more, visit www.taxes.ca.gov.
Changes Impacting Taxpayers
Paid Family Leave Benefits are not taxable by California. Beginning in July 2004, California's Paid Family Leave insurance program provides partial wage replacement to California workers covered by State Disability Insurance who must provide care for a seriously ill family member or who need time to bond with a new child.
The California Military Family Relief Fund and California Prostate Cancer Research Fund are new to this year's list of voluntary contribution funds on the tax return.
The FTB is adding electronic signature options to its e-file signature procedures. This will mirror the IRS practice of allowing taxpayers to sign using a personal identification number (PIN). In addition to the new electronic signature options, taxpayers can still use Form FTB 8453, California e-file Return Authorization.
New law requires the FTB to begin charging a fee to set up payment arrangements and to perform certain expedited services. The new fees are:
|1. Installment payment programs||$20|
| 2. Expedited services for:
Corporation revivor or tax clearance certificate requests
Tax-exempt status requests
Go Online to Pay Paperless
Taxpayers can pay their taxes through the FTB’s Website. Web Pay works much like a debit card transaction. Taxpayers authorize payments from their bank account on a specific date, on or before April 15, to satisfy their return balance due or extension payment. Taxpayers can also pay estimated tax or make any bill payments online.
Taxpayers can also pay their taxes with their Discover/NOVUS, MasterCard, American Express, or Visa cards. To charge it, call (800) 2PAY TAX [(800) 272-9829] or access www.officialpayments.com. The vendor charges a convenience fee.
Can't pay your taxes? Request a payment plan online and get an answer within days. If you owe less than $10,000 and can repay it within three years, you will generally qualify.
Don't want to owe taxes? Go to the California taxes homepage at www.taxes.ca.gov and use the new DE 4 Calculator, Employee's Withholding Allowance Certificate to compute your suggested payroll withholding amounts to closely approximate your tax liability.
Have Questions - Where to Get Tax Help
Click before you call! The FTB has everything you need to complete your tax return available online. The FTB also provides 24 hour phone service through its automated toll-free phone line at (800) 338-0505. In addition, the FTB staffs its general toll-free phone line, (800) 852-5711, from 7:00 a.m. to 7:00 p.m., weekdays. Avoid using cell phones when calling to discuss your personal information.
The FTB also has six regional field offices that provide customer service in Los Angeles, Oakland, Sacramento, San Diego, San Francisco, and Santa Ana.
For those who want help completing their tax forms, the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs staff more than 1,100 volunteer centers statewide. They offer free tax help to low-income, senior, and disabled individuals. Some sites offer bilingual service. For the nearest location, call the FTB or visit our Website.
For the fourth consecutive year, the National Association of Computerized Tax Preparers recognized California as an outstanding state in connection with the FTB's work with companies that develop computerized tax preparation software, specifically for FTB's efforts in Communication and Electronic Delivery.
Editor's Note: For a listing of local VITA sites, check our Website after January 15 or call.