1. TAX-AIDE California Supplement to 2013 NTTC Training Slides California Volunteers Make The Difference 2013 California1

2. TAX-AIDE 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 California2

3. TAX-AIDE 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 California3

4. TAX-AIDE 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 California4

5. TAX-AIDE 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 California5

6. TAX-AIDE 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 California6

7. TAX-AIDE 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 California7

8. TAX-AIDE 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 California8

9. TAX-AIDE 8 CA Income – Wages Lesson 7 ● Check box top of W2 input to take calc off line 16 2013 California9 ● Enter state wages as shown on W-2

10. TAX-AIDE 8 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 2013 California10

11. TAX-AIDE CA Income Wages Lesson 7 ● Enter state info as on W-2 2013 California11 Enter Disability Insurance in SDI literal box ONLY Describe same as on W-2 LOCKED

12. TAX-AIDE 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 California12

13. TAX-AIDE 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 California13

14. TAX-AIDE 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 California14

15. TAX-AIDE 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 California15

16. TAX-AIDE CA Income – Interest- Dividends Lesson 8 ● US obligation mutual fund – Dividend Statement ● Use minus (-) and amount in State Adjust columns 2013 California16

17. TAX-AIDE 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 California17

18. TAX-AIDE 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 California18

19. TAX-AIDE Are line 8 and 9 correct or incorrect? CA Income – Interest- Dividends Lesson 8 ● Make sure CA Sch CA is right 2013 California19

20. TAX-AIDE 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 California20

21. TAX-AIDE 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 California21

22. TAX-AIDE 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 California22

23. TAX-AIDE 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 California23

24. TAX-AIDE 2012 2013 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 California24

25. TAX-AIDE 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 California25

26. TAX-AIDE CA Retirement Income Lesson 13 ● Railroad Retirement, tier 2, non-taxable to California ● Form 1099R – Check the Railroad Retirement Box 2013 California26

27. TAX-AIDE 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 California27

28. TAX-AIDE 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 California28

29. TAX-AIDE 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 California29

30. TAX-AIDE 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 California30

31. TAX-AIDE 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 California31

32. TAX-AIDE 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 California32

33. TAX-AIDE 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 California33

34. TAX-AIDE CA Other Income Lesson 18 ● CA state lottery – NOT taxable for CA Use separate W-2G TaxWise makes the adjustment 2013 California34 Check the box on form W-2G CA lottery losses

35. TAX-AIDE 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 2013 California35 Automatic Must input

36. TAX-AIDE 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 California36

37. TAX-AIDE 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 2013 California37 OPTIONAL

38. TAX-AIDE CA Credit for Child & Dependent Care Lesson 22 ● Provider telephone number required ● Address where care actually occurred 2013 California38

39. TAX-AIDE 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 California39

40. TAX-AIDE 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 California40

41. TAX-AIDE 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 CA Renter’s Credit Lesson 26 2013 California41

42. TAX-AIDE 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 Direct Deposit Lesson 30 2013 California42  CA Form 540 Pg 3

43. TAX-AIDE CA Installment Agreement Lesson 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 California43

44. TAX-AIDE 22-30 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 2013 California44 OR

45. TAX-AIDE 32-34 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 2013 California45

46. TAX-AIDE CA Wrap-Up Lesson 32 ● Have taxpayer sign CA 8879 and keep with their tax records The site does not keep a copy 2013 California46

47. TAX-AIDE CA Quality Review ● Carefully review CA sch CA for federal – CA differences Is what’s there right? Is anything missing? 2013 California47

48. TAX-AIDE California Questions? Comments? Thank you for volunteering! 2013 California48