Changes to 2013 Forms
Updates to the Schedule CA (540NR) Instructions on 07/31/2014 –– Instructions for 540NR Schedule CA, California Adjustments - Residents
We replaced text on:
- Page 5, Column 1, Mortgage Forgiveness Debt Relief paragraph.
- Page 7, Column 2, below Line 41 – Other Adjustments.
- Mortgage forgiveness debt relief. California law does not conform to federal law regarding the discharge of indebtedness from the disposition of your principal residence occurring on or after January 1, 2013. Enter the amount of discharge on line 21f, column C.
- Note: new text added.
- Mortgage forgiveness debt relief. Federal law allows an exclusion of income from discharge of indebtedness from the disposition of your principal residence. Federal law limits the amount of qualified principal residence indebtedness to $2,000,000 ($1,000,000 for married filing separate). See federal Publication 544, Sales and Other Dispositions of Assets, and federal Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, for more information. California law conforms, with modifications, to the federal provisions for discharges of indebtedness occurring on or after January 1, 2009 through 2013. California law limits the amount of qualified principal residence indebtedness to $800,000 ($400,000 for married/RDP filing separate) and debt relief to $500,000 ($250,000 for married/RDP filing separate).
If the amount of debt relief for federal purposes is more than the California limit, include the amount in excess of the California limit on line 21f, column C.
- Philippine Disaster - If you deducted contributions made for the relief of victims in areas affected by Typhoon Haiyan on your federal Schedule A (Form 1040), California does not conform to the federal Philippines Charitable Giving Assistance Act, and therefore those deducted contributions must be reported as a negative number on line 41.
Reason for the changes
- AB 1393, signed by the Governor on July 21, 2014, retroactively allows the exclusion of the discharge of qualified principal residence indebtedness, as defined, from an individual’s income if that debt is discharged on or after January 1, 2007, and before January 1, 2014.
- California does not conform to the federal Philippines Charitable Giving Assistance Act enacted March 25, 2014.
- This revision will decrease the tax liability for taxpayers who exclude the discharge of qualified principal residence indebtedness.
- This revision may increase the tax liability for taxpayers who erroneously claimed a contribution for the Philippines Charitable Giving Assistance on their 2013 California tax return.
Updates to the Schedule CA (540NR) Instructions on 02/25/2014 –– Instructions for 540NR Schedule CA, California Adjustments - Nonresidents and Part-Year Residents
We replaced text on Page 7, Column 1, Column E, California Amounts, above Line 28 and Line 32 instructions.
Note: new text added.
Line 27 – Deductible part of Self-Employment
If you claimed a deduction in column A for self-employment tax paid, your California deduction is limited to a percentage of the total California deduction, line 27, column D. That percentage is the ratio of:
|(Self-employment income reported in column A from all sources while a CA resident||
|Self-employment income reported in column A from CA sources while a nonresident)||
|Total self-employment income Reported in column A||
Multiply your total California deduction, line 27, column D by the California ratio described above and enter the result on line 27, column E. If the California ration is greater than 1.00 enter the amount from line 27, column D on line 27, column E. If the California ratio is less than zero, enter -0- on line 27, column E.
Reason for the changes
Column E, Line 27 instructions were erroneously deleted and are therefore being inserted back.
This revision may possibly increase the tax liability for taxpayers who claimed a deduction for self-employment tax paid.
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