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State of California Franchise Tax Board

Head of Household Taxpayers To Get Audit Letters

Audit letters to 200,000 Californians requesting information to verify their use of the Head of Household tax filing status for 2001 are in the mail, according to the Franchise Tax Board (FTB).

“The Head of Household filing status affords qualified taxpayers a significant tax savings. I encourage everyone eligible to take advantage of it to reduce their taxes,” said State Controller and Chair of the Franchise Tax Board Kathleen Connell.

The FTB reviews returns claiming this filing status because the rules for it are often misunderstood. Many people who consider themselves the “head of their household” but do not meet the law's requirements, use it by mistake. This filing status has lower tax rates and a higher standard deduction than the single filing status. It is intended to help unmarried people who provide a home for a qualifying person, typically their child.

The FTB's Website at /individuals/hoh/index.shtml provides information about this filing status. New this year on the Website is a self-test to aid those who have questions regarding their eligibility. The self-test is also provided in the state's tax booklets.

This audit program aims to ensure that taxpayers use the Head of Household filing status correctly. Of the more than 14 million tax returns filed in California each year, nearly two million returns claim the Head of Household filing status. Last year, the FTB determined that nearly 26,000 taxpayers did not qualify for it.

The FTB assess added tax to those determined not to qualify by using either the single or married filing separate filing status. Taxpayers not responding to the letter may get penalties. Last year, this audit program resulted in $30 million in tax assessments.

Taxpayers who e-file their tax return can voluntarily complete a Head of Household questionnaire and include it with their e-filed return. Taxpayers who submit e-file questionnaires are less likely to be audited for this filing status.

Anyone who has questions about this filing status should request the FTB's Publication 1540, Tax Information for Head of Household, by calling the FTB at (800) 338-0505 and entering code 934 or by visiting the FTB's Website.

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