California State Tax Returns Filing Guide
If you are a new California resident, you need to learn how to prepare your California state tax returns. As with any state, California has its own set of tax laws and regulations. The California state tax department, referred to as the Franchise Tax Board, has very similar laws to the IRS. Don't assume that you can file your California state tax returns the same way you would your Federal return.
Who Is Required to File California State Tax Returns?Single California residents under 65 years old are only required to file state tax returns if they make more than $15,000 in gross income. The minimum income goes up if you are a senior citizen or have dependents. If you live in California for any part of a year and receive income, you must file California state tax returns. If you did not live in California at all, but receive a California source income, you also must file California state tax returns. Some income is considered tax exempt from the Franchise Tax Board. A few examples include:
- Unemployment compensation
- Social Security Income and Railroad Retirement Benefits
- California State Lottery winnings
- Cancelled debt related to a home sale
How Do You File California State Tax Returns?Just like your Federal taxes, you can file your California states tax returns by mail or electronically. If you file by mail, fill out a Form 540 and send it to the Franchise Tax Board address in Sacramento, CA. If you want to e-file your California state tax returns, the Franchise Tax Board has a tool that will locate an e-file provider.
Deductions Used on California State Tax ReturnsMany deductions that you would use for Federal tax returns can be used for your California state tax returns. However, there are numerous deductions that the Franchise Tax Board disallows. These include:
- Federal estate taxes
- Contributions to your health savings account
- Expenses for school employees
- Expenses involved with the adoption process
- Other state, local, or foreign taxes you paid
Also, some of the deductions the IRS and the Franchise Tax Board share provide different amounts you can claim. There are a few tax deductions California will allow that the IRS won't. These include utility company loan interest, the federal mortgage interest credit, and the medical expenses of a domestic partner and the partner's dependents.
Credits Used on California State Tax ReturnsThere are many credits you can take directly from your California state taxes. The following list shows just a few of the credits you can use on your California state tax returns.
- Renters Credit ranges from $60 to $120 for taxpayers under a certain income bracket.
- Dependent Parent Credit helps separately filing spouses or partners housing a parent.
- Adoption Cost Credit deducts 50% of that year's qualified adoption costs from taxes.
- Exemption Credit takes off $99 for you, your spouse, and dependents.
You may qualify to use many more credits than these on your California state tax returns. Fully utilize those that you truly are eligible for, since they may do a lot to lower what you owe the Franchise Tax Board.
Do you need help getting caught up with your California state tax returns or with your California tax debt? Consult a professional. Call now or fill out the form below for a free tax debt consultation on California state tax returns! We'll only connect you with a tax debt relief company holding at least a B rating with the Better Business Bureau.