State Tax Media Host Guide 2015
FRANCHISE TAX BOARD
PUBLIC AFFAIRS OFFICE
Taxes can be complex and confusing to your broadcast audience. We try to take the hassle out of tax time by offering innovative ways to get tax help and file through the Internet. We appreciate your help to get this information to the people in your community who need it.
Frequently asked questions
The following questions might assist you in planning your interview. We encourage you to use these frequently asked questions by the public.
- What is CalFile?
- If taxpayers want to prepare their own tax return, how do they start?
- Why should taxpayers e-file?
- How do taxpayers calculate their estimate tax payments?
- Does FTB split refunds?
- What taxpayer assistance is available?
- What if taxpayers want to hire a tax professional?
- What are the common errors taxpayers should avoid?
- What should taxpayers do if they cannot file by April 15?
- What if taxpayers owe and cannot pay?
- Why do taxpayers need to file separate federal and California tax returns?
- What form do taxpayers file if they moved into or out of California?
- What should taxpayers do if they changed their address during the year?
- What other online services are available at ftb.ca.gov?
- How can taxpayers contact FTB?
- What should taxpayers do if they made an error on their tax return, forgot to claim a deduction, or received a late W-2?
Other information to consider
- When or why does FTB audit?
- What should taxpayers do if the IRS audits them?
- What should taxpayers do if FTB sends them notices?
- What is use tax and how do taxpayers know if they owe it?
- What can taxpayers do if they think an FTB employee is being unreasonable?
- What is the tax gap?
- What is the California Competes Credit?
- What is the New Employment Credit?
- Any last minute thoughts you want to leave us with today?
- Tax Trivia: Did you know? (As of December 12, 2014)
Ask a Legal Expert
Ask a Legal Expert allows taxpayers or their representatives to submit basic legal questions directly to FTB’s Legal Division. The questions should pertain to requests to explain, interpret, or apply a state tax law.
The questions should not pertain to matters that are under audit, at protest, on appeal, in settlement or in litigation. Those questions are more appropriately addressed by the attorney assigned to the case.
Business Credit Card Payment Option
Now both business and individual taxpayers can use credit cards to pay state income taxes.
FTB now offers all taxpayers three ways to pay estimated tax payments, extension payments, and any amount due on current year or prior year tax returns.
Personal income taxpayers and businesses can make their online payments using FTB’s Web Pay or by credit card through Official Payments Corporation. A convenience fee is charged for this service by Official Payments Corporation.
Mandatory E-Filing of Business Entity Returns
Business entities that use tax preparation software must file electronically beginning January 1, 2015, for taxable years 2014 and on. This requirement applies to both original and amended returns.
“Business entity” includes all corporations (including tax-exempt organizations), partnerships, and limited liability companies (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.
- Reasonable cause.
FTB is currently working on an online, paperless form to request these waivers, as well as some FAQs with additional information on the new requirement.
Although e-filing is required for returns filed on or after January 1, 2015, no penalties will be imposed for two 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.
Taxpayers can contribute to one or more charitable causes directly from their state tax form. New on the 2014 tax return are the:
- California Senior Legislature Fund.
- Habitat for Humanity Fund.
- California Sexual Violence Victim Services Fund.
See FTB’s tax forms for a complete list of available charities. For more information, go to ftb.ca.gov and search for voluntary contributions.
Expired Federal Tax Law Provisions (Placeholder in the event Congress doesn’t extend these provisions- more info available around 12/15/14)
The IRS is waiting for Congress to act on several expired federal tax law provisions. The three that impact California tax forms (Schedule CA) are: (1) educator expenses deduction; (2) tuition and fees deduction; and (3) sales tax deduction (in lieu of state income tax). Unless Congress acts to extend these provisions, they are expired as of January 1, 2014.
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. A like-kind exchange occurs when a taxpayer defers gain or loss recognition by exchanging property versus selling it. The new reporting requirement applies when property located in California is exchanged for property located outside California. For tax year 2014, only exchanges of real property are required to be reported.
Form FTB 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.
College Access Tax Credit Fund
This credit is available to individuals and companies who make cash contributions to the College Access Tax Credit Fund (CATC). The fund goes to the Cal Grant B program, which provides money for books and living expenses to low-income college students.
The CATC is available for taxable years 2014 through 2016. To claim the credit, a taxpayer must make a contribution to the CATC fund administered by the California Educational Facilities Authority (CEFA). Taxpayers must receive a certificate from CEFA documenting the amount of the contribution and the credit amount. The credit’s total amount that CEFA can allocate for each year is $500 million. The amount of the credit for each taxable year is:
- 60% of the amount contributed for the 2014 taxable year.
- 55% of the amount contributed for the 2015 taxable year.
- 50% of the amount contributed for the 2016 taxable year.
Any allocated credit that the taxpayer is unable to utilize in the current taxable year may be carried over until exhausted for up to six years after the credit is first claimed.
CEFA began accepting applications for an allocation of the credit on November 3, 2014.
New Mobile Website Design
FTB optimized its mobile website to adjust 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 use.
The amounts are based on filing status:
- Single or filing separately: $3,992.
- Joint, surviving spouse, or head of household: $7,984.
Personal Exemption Credit
The amounts are:
- $108 per individual.
- $216 for joint filers.
Blind individuals and seniors 65 years or older receive double the individual amount.
Dependent Exemption Credit
Families can reduce their tax bill by $333 per dependent.
- Single renters whose adjusted gross income is $37,768 or less can claim a $60 credit.
- Joint or head of household filers whose adjusted gross income is $75,536 or less can claim a $120 credit.
Federal Earned Income Tax Credit (EITC)
This is a federal incentive for low to moderate income individuals and families. Taxpayers who earn less than $52,427 can qualify for a refundable credit that can total up to $6,143. “Refundable” means that the federal government can issue a taxpayer a refund check even if they do not have a tax liability. If taxpayers want to know if they qualify, they can go to irs.gov and search for EITC Assistant.
California has no comparable state credit.
Surprisingly, not everyone has to file. Each year FTB gets thousands of tax returns from people who have no filing requirement. FTB bases their filing requirements on income amounts and exemption credits.
For 2014, taxpayers do not need to file a personal state income tax return if they are:
- Single or head of household and their total income was less than $16,047.
- Married or registered domestic partners and their total combined income was less than $32,097.
These income threshold amounts are higher if taxpayers have dependent or senior exemptions. Also, the rules differ if another person can claim the taxpayer as a dependent their tax return.
If taxpayers had wage withholding or they made estimated tax payments, they must file a tax return to get their refund.
CalFile is FTB’s no-cost, easy-to-use e-file option available to more than 6.4 million taxpayers. Taxpayers can use CalFile if they have income up to $352,830, itemized deductions, and some tax credits.
CalFile guides taxpayers through a simple question and answer process. It takes about 15 to 30 minutes to complete. FTB no longer offers ReadyReturn. However, CalFile now offers ReadyReturn features and more, such as the ability to:
- Import information to the tax return that Franchise Tax Board already has on record (similar to ReadyReturn).
- Save a partially completed tax return to finish later.
- Save a completed tax return to view or print later.
- File a tax return early in the tax year (beginning January 2).
- File a prior year tax return.
For many, it’s not that hard.
They should do the following:
- Gather the documents they need to prepare their state tax return:
- Income reporting documents such as W-2s and 1099s.
- Tax deduction documents:
- Tax payment records.
- Mortgage interest expenses.
- Charitable contributions, etc.
- Complete their federal tax return first.
- Follow the instructions on the California tax return.
- To arrive at California taxable income, they start with their federal adjusted gross income and then make adjustments for differences between federal and state law.
- If they don't know, they shouldn't guess. They should contact FTB to get answers to their tax questions.
- Taxpayers get a quick tax refund, normally within 7 to 10 days if they e-file and choose direct deposit. If taxpayers mail their tax return in January or February, they generally get their refund in a couple of weeks after filing their return. However, if they wait until late March or April to file, they can expect to wait 8 to 12 weeks for their refund check.
- It’s safe, accurate, and fast. e-filed tax returns have fewer errors, which means taxpayers are less likely to hear from us later.
- FTB sends taxpayers confirmation almost immediately when FTB receive their tax return.
- It’s free if taxpayers use CalFile. Some commercial software companies offer free e-file to selected customers.
- It reduces government costs.
Besides CalFile, many e-file software packages can help ease the tax filing process. The programs walk taxpayers through a virtual tax interview and prompt them to take advantage of relevant tax credits. FTB's website provides links to many software vendors. Taxpayers can e-file from their own computer or through a professional tax preparer.
For taxpayers who need to make quarterly estimate tax payments, the California scheduled amount 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
Yes. Taxpayers can request that FTB electronically deposit their refunds into more than one account. This encourages taxpayers to split their refunds to save some of their refund money. New this year is direct deposit for ScholarShare. FTB can split refunds into two accounts such as:
- Money market
Taxpayers should make sure their financial institutions accept deposits into the accounts selected for direct deposit.
The Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA/TCE) programs offer free tax help. California has more than one thousand sites where trained volunteers provide free help to low to limited income, senior, disabled, and non-English speaking persons who file simple federal and state tax returns.
Many military bases provide this service for the U.S. Armed Forces.
Starting February 1 through April 15, taxpayers can search online by ZIP code, city, or county for locations. Go to ftb.ca.gov and search for VITA site.
For those who decide to hire an income tax return preparer, they may want to read FTB 982, How to Select an Income Tax Return Preparer. In this publication, the IRS and FTB offer tips on how to select someone to trust. Taxpayers are responsible for their tax return information accuracy.
Taxpayers should avoid the following top three errors:
- Claim incorrect estimated tax payments.
- Deduct the wrong amount for the standard or itemized deductions.
- Select the wrong amount of tax from the tax table on paper tax returns.
To avoid these errors, we suggest taxpayers:
- Go to ftb.ca.gov and access their account to verify the amounts that they have for their estimated tax payment, wage and withholding information, and current balance due.
- Accurately add and transfer their total deductions to the correct line of the tax return.
- Double-check the tax amount they transferred from the tax table or the online tax calculator.
No problem. All personal income taxpayers get an automatic six-month filing extension to October 15. The extension is only for filing tax returns and not for payment of any taxes that may be due. They need to pay the total tax due by April 15 to avoid penalties and interest.
Taxpayers who can’t immediately pay in full may be eligible to make installment payments. FTB recommends they make the largest monthly payment possible to limit the amounts of interest and penalties that accrue until they pay the tax liability in full.
FTB generally approves monthly payment plan requests if the taxpayer owes $25,000 or less and can pay in full within 60 months. FTB generally does not file liens on these taxpayers’ accounts.
Taxpayers can establish payment plans online. They should go to ftb.ca.gov and search for payment options. They can also request payment plans using FTB’s automated phone line at 800.689.4776. Information is available in both English and Spanish.
Taxpayers may pay taxes by credit card. FTB accepts Visa, Master Card, Discover/NOVUS, and American Express.
They can pay:
- Online at Official Payments Corporation: www.officialpayments.com
- By telephone at 888.2PAY.TAX or 888.272.9829.
Service providers charge a convenience fee for this service based on the amount charged.
Federal tax laws differ from California tax laws. FTB suggests that they prepare their federal return first to make it as easy as possible. California’s tax return starts with federal adjusted gross income and then makes adjustments for state tax differences.
They file Form 540NR, California Nonresident or Part-Year Resident Income Tax Return, long or short form for the year they moved. The short form is for those whose income is made up mostly from wages.
Depending on the laws of the state they moved to or from, they may need to file a tax return for that state also. Taxpayers may qualify for a credit for income taxes they paid to another state when California taxes the same income that the other state taxed.
They should notify FTB immediately.
- Website: Go to ftb.ca.gov to access their MyFTB Account and change their address online.
- Phone: 800.852.5711
They can also mail a completed FTB 3533, Change of Address to:
FRANCHISE TAX BOARD
PO BOX 942840
SACRAMENTO CA 94240-0002
Each year, the U.S. Post Office returns millions of dollars in refund checks to FTB as undeliverable. This is generally because taxpayers moved after they filed their tax return. The post office does not forward refund checks.
Taxpayers can take advantage of many online services including:
- Find answers to frequently asked questions.
- Get tax forms and publications.
- e-file their tax return for free using CalFile or other participating online filing services.
- Get their refund status.
- Check their MyFTB Account for wage and withholding data, balance due or payments made.
- Change their address.
- Use WebPay to authorize payments from their bank account.
- Make payments with a credit card.
- Apply for a payment plan.
- Email their non-confidential tax questions.
- Calculate their taxes.
- Respond to head of household questionnaires.
- Report tax fraud.
- Get an Entity Status Letter.
- Research legal rulings, reports, statistics
- Get quick answers to general tax questions using LiveChat
Internet and Telephone Services
- Website: ftb.ca.gov
- 24/7 Automated Support: 800.338.0505
- Listen to recorded answers to frequently asked tax questions.
- Order state tax forms.
- Get their refund status.
- Verify their balance due or payments made.
- General Assistance: 800.852.5711
FTB is ready to answer questions from 7 a.m. to 5 p.m. weekdays, except state holidays.
- Federal Tax Questions: 800.829.1040
If taxpayers want to speak with an FTB representative in person, they can visit one of these walk-in field offices:
|Los Angeles||300 S. Spring St. Suite 5704|
|Oakland||1515 Clay St. Suite 305|
|Sacramento||3321 Power Inn Rd. Suite 250|
|San Diego||7575 Metropolitan Dr. Suite 201|
|San Francisco||121 Spear St. Suite 400|
|Santa Ana||600 W. Santa Ana Blvd. Suite 300|
Office hours are 8 a.m. to 5 p.m. weekdays, except state holidays.
Important: FTB does not accept cash payments in the Los Angeles, Oakland, San Diego, and San Francisco field offices, but does accept checks, money orders, and credit cards (for a fee.)
The Santa Ana and Sacramento field offices each accept cash, checks, credit cards, and money orders as payment.
Taxpayers may also pay through WebPay. It is a convenient, free and secure method of authorizing a payment from a bank account.
What should taxpayers do if they made an error on their tax return, forgot to claim a deduction, or received a late W-2?
Taxpayers can correct their California tax return by filing Form 540X, Amended Individual Income Tax Return. It takes longer to process amended tax returns than original tax returns.
For simple math errors, taxpayers generally do not need to file amended tax returns. FTB typically corrects math errors when they process tax returns. FTB also contacts taxpayers about missing documents.
Other information to consider
FTB audits to verify information that taxpayers report on their returns such as income, exemptions, credits, or deductions. FTB may select taxpayers for audit based on information reported on returns or received from third parties.
Taxpayers should notify FTB within six months of the conclusion of the IRS audit. Taxpayers have the option to file an amended tax return or send FTB a copy of the federal changes. It is best to notify FTB as quickly as possible to reduce interest and penalties.
For more information, go to ftb.ca.gov and get FTB 1008, Federal Tax Adjustments and Your Notification Responsibilities to California, or call 916.845.4028 for assistance.
Most notices inform taxpayers of changes they made. If they ask for information, taxpayers must respond.
Information notices include:
- Notice of Tax Change
- Return Information Notice
They send these notices after they find and correct one or more errors while processing a tax return.
California law requires residents to pay use tax on purchases made from out-of-state sellers, such as by telephone, internet, mail, or in person if:
- The seller does not collect California sales or use tax.
- The taxpayer uses, gives away, stores, or consumes the item in California.
Taxpayers can use a “look-up” table to report their use tax obligations on their state income tax return. The amount of use tax due is based on the person’s adjusted gross income. Taxpayers can go to boe.ca.gov for more details.
If taxpayers feel that they are unable to resolve their problems through normal channels, they may contact the Taxpayers’ Rights Advocate.
- Website: Go to ftb.ca.gov and search for Advocate.
- Phone: 800.883.5910
- Fax: 916.843.6022
EXECUTIVE AND ADVOCATE SERVICES MS A381
FRANCHISE TAX BOARD
PO BOX 157
RANCHO CORDOVA, CA 95741-0157
The tax gap is the difference between taxes owed and paid. It continues to receive a lot of attention at both the state and federal levels.
FTB estimates California's tax gap (at least for the personal and business taxes that FTB administers) is about $10 billion per year.
Most of the tax gap comes from people and businesses that underreport their income or overstate their deductions.
Taxpayers can now help solve the tax gap by reporting suspected income tax fraud. They can go to ftb.ca.gov and search for tax fraud to use the new online report tax fraud service or call the Informant Hotline at 800.540.FILE (3453).
Our special agents investigate alleged criminal violations of the Revenue and Taxation Code (including income tax fraud and tax evasion). We also assist in prosecuting noncompliant individuals for these criminal activities and publicize resulting convictions. These convictions bring additional tax revenue to the State of California and also serve as a deterrent to others from violating the tax laws.
The California Competes Tax Credit is a state personal or corporate income/franchise tax credit available to businesses that come to or stay and grow in California. The Governor's Office of Business and Economic Development (GO-Biz) will negotiate and a statutorily created “California Competes Tax Credit Committee” will approve these tax credit agreements.
For more information, go to ftb.ca.gov and search for California Competes Credit.
From January 2014 through January 2021, qualified employers can claim the New Employment Credit against corporate and personal income taxes.
The credit is only available to qualified businesses located in the following designated geographic areas (DGA):
- Census tracts with the 25 percent highest share of both unemployment and poverty in the state.
- Former enterprise zones.
- Local Area Military Base Recovery Areas (LAMBRAs.)
Employers who hire qualified full-time employees and have a net increase in full-time jobs can claim the credit.
In general, the credit equals 35 percent of the wages between 1.5 and 3.5 times the minimum wage over a five year period.
Taxpayers can only claim the credit on a timely filed, original return.
Very important: Businesses that want to claim these credits must request a “tentative credit reservation” with FTB within 30 days of the employee’s hire date.
Employers can use the online searchable map to determine if a location is in the DGA.
For more information, go to ftb.ca.gov and search for New Employment Credit.
Taxpayers should e-file and use direct deposit to get their refunds fast – generally within 7 to 10 days. FTB’s CalFile is a no-cost, easy-to-use filing option.
Taxpayers who owe tax should use Web Pay, which allows them to authorize a payment from their bank account on a specific date. Taxpayers should pay on or before April 15 to avoid penalties and interest.
After they file, taxpayers should keep a copy of their tax return and all supporting records. FTB may request information from them regarding their tax return at any time within the California statute of limitations period, which is generally four years from the due date of the tax return.
- Last year:
- Californians filed more than 16.8 million tax returns.
- More than 10.8 million Californians received refunds averaging $991.
- The most common tax error is claiming the wrong amount of estimated tax payments.
- More than 14 million California tax returns, or about 84 percent of the total, were filed electronically.
- In 1929, the Legislature created the office of the Franchise Tax Commissioner to administer California’s new Bank and Corporation Franchise Tax Act. Charles McColgan was the first Franchise Tax Commissioner and served until his retirement in 1950. At that time, the Legislature abolished the office of the Franchise Tax Commissioner and created the Franchise Tax Board. The first year California individual taxpayers had to file a state tax return was 1935.