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California Supplement to 2013 NTTC Training Slides

California Supplement to 2013 NTTC Training Slides. California Volunteers Make The Difference. CA Filing Basics Lesson 3. Deceased Taxpayer or Spouse The executor / guardian information must be entered on 540 Pg 1

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California Supplement to 2013 NTTC Training Slides

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  1. California Supplement to 2013 NTTC Training Slides California Volunteers Make The Difference 2013 California

  2. CA Filing Basics Lesson 3 • Deceased Taxpayer or Spouse • The executor / guardian information must be entered on 540 Pg 1 • Failure to complete the executor/guardian information will cause an e-file reject 2013 California

  3. CA Filing Basics Lesson 3 • Deceased Taxpayer or Spouse CA 540 Pg 1 • If the surviving spouse is filing the return, enter the surviving spouse’s name/number • If there is only a beneficiary (acting as an executor), enter the beneficiary’s name/ number 2013 California

  4. CA Filing Basics Lesson 3 • Deceased Taxpayer or Spouse CA 540 Pg 1 • Complete the decedent representative information • If filing as a surviving spouse, TaxWise completes “Decedent Representative” with the survivor’s name • Check the spouse box 2013 California

  5. CA Filing Status Lesson 4 California scope limitations • Full year resident returns only • Taxpayers employed in multiple states are out of scope • Other state returns are out of scope 2013 California

  6. CA Filing Status Lesson 4 • The only time MFS is in scope • Has not lived with spouse for entire year or more • Cannot locate spouse / no intention to reconcile • Files using own income only (no splitting) 2013 California

  7. CA Head of Household Lesson 4 • Additional info required: CA form 4803e (2 pages) • Make sure all TaxWise red fields are completed or cleared (F3) • All 4803e forms are reviewed by FTB!! 2013 California

  8. CA Income - Wages Lesson 7 • W-2 box 1 and 16 can or should be different, e.g.: • W2, box 12 code W employer paid HSA contribution • Ride share benefits are not taxable for CA 2013 California

  9. CA Income – Wages Lesson 7 • Check box top of W2 input to take calc off line 16 • Enter state wages as shown on W-2 8 2013 California

  10. CA Income - Wages Lesson 7 • If state wages differ, enter the difference directly on CA CA pg 1 form as a subtraction or addition • Can use a scratch pad to explain the difference or use Line 21 f 8 2013 California

  11. CA Income Wages Lesson 7 LOCKED • Enter state info as on W-2 Enter Disability Insurance in SDI literal box ONLY Describe same as on W-2 2013 California

  12. CA Disability • CASDI or SDI – deductible as a state income tax on federal Sch A • TaxWise handles correctly when CASDI is in literal box (we default) and amount is entered on that same line (a required field) 2013 California

  13. CA Income Wages Lesson 7 • Special situation – state / county paid in-home care • All use same employer ID# • Payer name changes – care recipient’s name • TW employer database brings up last used • Change name and other employer information for each instance • Note: If care provider is related, no social security or Medicare tax withheld • Take calc off L 3, 4, 5 and 6 2013 California

  14. CA Income – Interest- Dividends Lesson 8 General CA tax rules: • “US Bond” interest - 100% exempt • “California” interest - 100% exempt • Other than CA interest - 100% taxable for CA (mutual funds are often called “Municipals” without CA in the name) • If documents say something different, follow the documents 2013 California

  15. CA Income – Interest- Dividends Lesson 8 • Interest income from US obligations is not taxable for CA • Includes US bonds, T-Bills/notes, federal land or home loan banks • Does not include Fannie Mae or Freddie Mac • Minus (-) & amount in state adjust columns 2013 California

  16. CA Income – Interest- Dividends Lesson 8 • US obligation mutual fund – Dividend Statement • Use minus (-) and amount in State Adjust columns 2013 California

  17. CA Income – Interest- Dividends Lesson 8 • Dividend income from California muni mutual fund is not taxable for federal or CA • Use Exempt int div column 2013 California

  18. CA Income – Interest- Dividends Lesson 8 • Interest income from states other than CA are taxable for CA (not taxed by federal) • Exempt “E” for federal • Taxable for CA: “+” state adjustment 2013 California

  19. CA Income – Interest- Dividends Lesson 8 • Make sure CA Sch CA is right Are line 8 and 9 correct or incorrect? 2013 California

  20. CA Income – Interest- Dividends Lesson 8 • Look for CA withholding on 1099 forms • Must input directly on F 540, L 71 – “1099” • Use scratch pad to detail payer’s name and state ID # 2013 California

  21. CA State Tax Refund Lesson 9 • State tax refunds are not taxed by California • Not even refunds from another state • Because they were never deducted for CA purposes • TaxWise makes the adjustment 2013 California

  22. CA Business Income Lesson 11 • There should be no differences between federal and state returns filing an in-scope Schedule C • Check the confirmation box at the top of CA Sch C after the amounts have been verified • To create a 2nd CA Sch C, click the “+” next to the first CA Sch C • For every federal Schedule C, there must be a corresponding CA Sch C 2013 California

  23. CA Capital Gains & Losses Lesson 12 • CA Sch D • Enter the capital loss carryover as a positive number on line 6 • There should be no difference between federal and CA capital loss carryover for an in-scope return (usually) 2013 California

  24. CA Capital Gains & Losses Lesson 12 • Capital loss carryover - CA Sch D • Line 6 will be red if there’s a federal cap loss carryover • Enter CA loss carryover as a positive number 2013 2012 2013 2013 California

  25. CA Capital Gains & Losses Lesson 12 • Look for CA withholding on 1099-B or 1099-S forms (or CA 592-B or 593) • Must input directly on F 540, L 71 or L 73 • Use scratch pad to detail payer’s name and state ID # 2013 California

  26. CA Retirement Income Lesson 13 • Railroad Retirement, tier 2, non-taxable to California • Form 1099R – Check the Railroad Retirement Box 2013 California

  27. CA Retirement Income Lesson 13 IRA basis difference • If a taxpayer or spouse contributed to an IRA in 1975, or 1982 through 1986 (or contributed to an IRA in those years and became a CA resident after 2002) • CA basis > federal basis • The taxpayer must have records • Reference FTB Pub 1005 • Out of scope 2013 California

  28. CA Unemployment Compensation Lesson 16 • Unemployment shown on form 1099-G • Paid Family Leave administered by the SDI program through EDD use form 1099-G • Non-taxable for California • TaxWise makes the adjustment 2013 California

  29. CA Social Security Lesson 17 US Social Security or Tier 1 Railroad Retirement • Not taxable for CA • Enter on TaxWise worksheet 1 • TaxWise makes the adjustment 2013 California

  30. CA Social Security Lesson 17 • Certain foreign social security is in scope • Canadian Pension Plan (CPP) • Quebec Pension Plan (QPP) • Old Age Security (OAS) or • German Social Security • Taxed like US social security for federal • Fully taxed by CA • Need adjustment on line 21, CA Sch CA (540), addition to income, Column C 2013 California

  31. CA Social Security Lesson 17 Foreign social security not taxed by federal, taxed by CA • Use amount NOT taxed by federal (not 100%) • F1040 L 20 a/b: not taxed here • $13,000 - $1,750 = $11,250 2013 California

  32. CA Social Security Lesson 17 Foreign social security not taxed by federal, taxed by CA • Enter amount NOT taxed by federal (not 100%) as an “addition” 2013 California

  33. CA Other Income Lesson 18 • Gambling income from CA state lottery • Taxable for federal • Exempt for CA • Gambling losses on CA state lottery • Deductible for federal (limited) • Not deductible for CA 2013 California

  34. CA Other Income Lesson 18 • CA state lottery – NOT taxable for CA • Use separate W-2G • TaxWise makes the adjustment CA lottery losses Check the box on form W-2G 2013 California

  35. CA Itemized Deductions Lesson 21 Foreign income taxes deducted for federal are not allowed for CA – CA CA P2 • TW brings forward amount from 1040 Sch A line 8 • Enter foreign tax on line 39 Automatic Must input 2013 California

  36. CA Credit for Child& Dependent Care Lesson 22 • CA credit is nonrefundable • Care must be provided in CA • CA form 3506 generated when federal 2441 is generated • TaxWise carries federal information • Go to and complete CA form 3506 2013 California

  37. CA Credit for Child& Dependent Care Lesson 22 • All care must be provided in CA • Unearned income other funds not required to be input – F3 to clear red OPTIONAL 2013 California

  38. CA Credit for Child& Dependent Care Lesson 22 • Provider telephone number required • Address where care actually occurred 2013 California

  39. CA Renter’s Credit Lesson 26 • Go to CA 540 Pg 1 and check the box if renter’s credit may apply: • Must have rented home in CA for at least 6 months • Must have a tax liability • Check “No” if no tax 2013 California

  40. CA Renter’s Credit Lesson 26 • Enter information on CA Rent wkt: • Answer all questions • CA address(es) rented during 2013 and dates rented for all applicable months • Landlord’s Name, Address, and Phone (two out of three will work; taxpayer’s info if Landlord not known) 2013 California

  41. CA Renter’s Credit Lesson 26 • Income limits • Paid rent for at least six months in CA • Property was not exempt from property tax • Did not claim homeowners exemption • Exception for separated/ divorced taxpayers • Special rules for MFS (out of scope) • Must have landlord info 22-30 2013 California

  42. Direct Deposit Lesson 30 • CA Form 540 Pg 3 Easiest method – federal and state refund direct deposit into same account If different, requires bank account info data entry. TaxWise highlights red all required fields 22-30 2013 California

  43. CA Installment AgreementLesson 30 • For taxpayers that cannot pay in full within 90 days • CA Form 3567 (counterpart to fed 9465) • Authorizes direct debit of monthly payment • $34 set up fee • More at www.ftb.ca.gov - Payment Options under the Popular Topics heading • Web pay is an option 2013 California

  44. CA Direct Debit Lesson 30 • Example of a federal refund/state balance due return CA 540 Pg 3 • Need to select how payment will be made • If EFT, enter date of scheduled payment, amount of payment requested, bank routing, account number, and type of account OR 22-30 2013 California

  45. CA Estimated Taxes Lesson 32 • If balance due is >$500, and it’s expected that 2013 will be the same, avoid underpayment penalty • Increase withholding • Do or increase Estimated taxes 32-34 2013 California

  46. CA Wrap-Up Lesson 32 • Have taxpayer sign CA 8879 and keep with their tax records • The site does not keep a copy 2013 California

  47. CA Quality Review • Carefully review CA sch CA for federal – CA differences • Is what’s there right? • Is anything missing? 2013 California

  48. California Questions? Comments? Thank you for volunteering! 2013 California

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