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State of California Franchise Tax Board

Dependent and Income Definitions

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The dependent's standard deduction is the larger of: The dependent's earned income plus $350, or $1,000 for the 2014 taxable year.

Important: The dependent's standard deduction can never be more than the normal standard deduction.

Gross Income Definition

California gross income is all income you received in the form of money, goods, property, and services from all sources that are not exempt from tax. Gross income does not include any adjustments or deductions.

Adjusted Gross Income Definition

California adjusted gross income is your federal adjusted gross income from all sources reduced or increased by all California income adjustments.

Children with Investment Income

For taxable years beginning on or after January 1, 2010, California law conforms to federal law which allows parents’ election to report a child’s interest and dividend income from children under age 19 or a student under age 24 on their tax return. For each child under age 19 or student under age 24 who received more than $2,000 of investment income in 2014, complete Form 540 and form FTB 3800, Tax Computation for Certain Children with Investment Income, to figure the tax on a separate Form 540 for your child.

If you qualify, you may elect to report your child’s income of $10,000 or less (but not less than $1,000) on your tax return by completing form FTB 3803, Parents’ Election to Report Child’s Interest and Dividends. To make this election, your child’s income must be only from interest and/or dividends.

Other Situations When You Must File

If you owe any of the following taxes for 2014, you must file Form 540:

  • Tax on a lump-sum distribution.
  • Tax on a qualified retirement plan, including an individual retirement arrangement (IRA) or on an Archer medical savings account (MSA).
  • Tax for children under age 19 or student under age 24 who have investment income greater than $2,000.
  • Alternative minimum tax.
  • Recapture taxes.
  • Deferred tax on certain installment obligations.
  • Tax on an accumulation distribution from a trust.

Earned Income Definition

Earned income includes wages, salaries, tips, professional fees, net self-employment income, and other compensation received for personal services.

Normal Standard Deduction Amounts

Standard Deduction Table

Single $3,992
Married/Registered Domestic Partner Filing Separate $3,992
Married/Registered Domestic Partner Filing Joint $7,984
Head of Household $7,984
Qualifying Widow(er) $7,984
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