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California Tax Board: 99 01

California Tax Board: 99 01

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Published by Taxman

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Published by: Taxman on Jan 22, 2008
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 Inside ...
2 ... FTB Refunds SDIOverpayments2 ... Assessment Notices Availableby Fax2 ... Renter’s Credit Returns asNonrefundable Credit3 ... When Married TaxpayersDivorce3 ... Changing an Address? UseForm FTB 35334 ... Are Club Dues Deductible?Not Always4 ... Activity, Membership, Dues,Help Define Clubs4 ... FTB, IRS Open New Tax Storein Milpitas4 ... Modified Instructions for SCorporation Filers5 ... Tax Form CorrectionsAnnounced5 ... FTB Calendar6 ... California’s e-file TopsMilestone6 ... FTB Offers e-pay Option7 ... FTB Developing 1099TestWare8 ... Schedules K-1: Five ReasonsNot to File on Paper8 ... Regulations Relax Water’s-Edge Criteria9 ... Practitioner Awareness DetersFraud9 ... Satisfy Educational Needs WithVideo Courses10 ... Claiming Head of Household?10 ... Stumped by Head of Household Questions?11 ... Keep Tax News Coming11 ... Are your 1998 Tax FormsApproved?12 ... 1998 Tax News Index15 ... FTB Helps Taxpayers ReportChanges15 ... Free Seminars For Businessesand Taxpayers
J A N U A R Y 1999
Renter’s Credit Returns to California
Californians who rent their primary residenceand owe taxes are now eligible to receive anonrefundable credit when they file their 1998California income tax return.The renter’s credit was reinstated, by statute,effective January 1, 1998 after beingsuspended for tax years 1993 through 1997.Assembly Bill 2797 amended the existingrenter’s credit to allow a nonrefundable creditamount of $120 for married filing jointreturns, heads of household, and survivingspouses, if their adjusted gross income (AGI)is $50,000 or less.A credit of $60 is allowed for individualtaxpayers who file single or married filingseparate returns if their AGI is $25,000 orless.Since the renter’s credit is a nonrefundablecredit that can only be used against a taxliability, a taxpayer must have a tax liability toclaim it.
Tina Stiles, an analyst with FTB’s ProcessingServices Bureau, assists Daniel J. Caminata(standing) and Andrew R. Smith, with theire-file applications during an IRS/FTB e-file seminar held November 16, 1998, inSacramento. California’s e-file program is growing. To find out why, please see the story on page 6. (FTB photo by Dan Chan.)
Welcome to e-file
Page 2January 1999
Worked for two or more employersduring the 1997 tax year.
Received more than $31,767 inCalifornia wages from the combinedemployers.
Received a W-2 from each employershowing the amount of SDI withheld.
Had a total amount of more than$158.84 withheld from the combinedemployers during the 1997 tax year.The Franchise Tax Board, incollaboration with the EmploymentDevelopment Department, issued refundsto taxpayers who overpaid their StateDisability Insurance, but failed to claimthe amount on their 1997 Californiaincome tax returns.The first refunds were mailed onDecember 30, 1998. FTB expects toissue more than 160,000 refunds toeligible taxpayers.In order to qualify, the taxpayer musthave met these requirements:
FTB Refunds SDI Overpayments
Volume 99-1 January 1999
is a bimonthlypublication of the CommunicationsServices Bureau, California FranchiseTax Board. Its primary objective is toprovide information to income taxprofessionals about state income taxlaws, regulations, policies andprocedures.
Members of the Board:
Kathleen Connell, ChairState ControllerJohan KlehsChair, State Board of EqualizationB. Timothy GageDirector, Department of Finance
Executive Officer:Gerald H. GoldbergEditor:Marvin Meek 
To update or correct your address or to subscribe to TAX NEWS (send $12 for a one-year subscription), write:
TAX NEWSPO Box 2708Rancho Cordova, CA 95741-2708or call: (916) 845-7070.
To view TAX NEWS on the Internet or to request an electronic mailsubscription, contact FTB on the Internet:
For information about a client’saccount, contact:
Tax Practitioner Support Unit
(916) 845-7057 (phone)(916) 845-6377 (fax)
For recorded answers to questions onCalifornia taxes, to order forms or check on a refund, call:
(800) 338-0505From outside U.S. (916) 845-6600
To send a facsimile about a client’saccount, transmit to:
Electronic Correspondence
(916) 845-6377
Information Center:
(800) 852-5711From outside U.S. (916) 845-6500
Hearing Impaired:
TDD (800) 822-6268
FTB on the Internet
Renter’s Credit Returns as Nonrefundable Credit
Assessment Notices Available by Fax
Your client has lost the Notice of Proposed Assessment from the FranchiseTax Board and asks for your help. Youneed a copy.You can get a copy by fax from FTB.Send a request by fax to FTB’s ElectronicCorrespondence Unit at (916) 845-6377with the following information:
Your request for a copy of theproposed assessment.
Your fax number.
Your telephone number.
A copy of your Power of Attorney.FTB will send you a copy of the proposedassessment, by fax, within seven days.If you do not receive a copy after sevendays or if you have questions, pleasecontact the FTB Tax Practitioner SupportUnit at (916) 845-7057.Taxpayers must meet this criteria in orderto qualify for the credit:
Their California AGI cannot exceed$25,000 if their filing status is singleor married filing separate; or $50,000if their filing status is married filing joint, head of household, or qualifiedwidow or widower.
Taxpayers must have rented propertyin California for use as their principalresidence for at least half the year in1998.
The taxpayer did not live withanother person (such as a parent)who claimed him or her as adependent in 1998.
The taxpayer is not a minor livingwith and under the care of a parent,foster parent or legal guardian.
The taxpayer rented property thatwas not exempt from Californiaproperty tax in 1998.
The taxpayer or spouse did not claima homeowner’s property taxexemption anytime during 1998.For additional information about how toqualify for renter’s credit, refer to the“Nonrefundable Renter’s CreditQualification Tax Record” in the 1998California Resident Personal Income TaxBooklet.
Refer to the “NonrefundableRenter’s Credit QualificationTax Record” in the 1998Income Tax Booklet.
Page 3
When Married Taxpayers Divorce
Be Sure to Tell FTB How to Apply Payments
In Gordonv. United States(11
Cir.1985) 757 F.2d 1157 the court found that“a policy which would require theCommissioner to delay refunds until afteraudits were made would be economicallyburdensome, and is certainly not requiredby statute.”There are steps that taxpayers can take tolessen the harm from this policy. FTBwill make every effort to eliminate orreduce the policy’s adverse impact on adivorced or separated taxpayer if thedepartment is put on notice thatcompeting claims exist.Tax practitioners can help by advisingtheir clients to notify FTB, in writing, of any divorce agreements or court orderedsettlements that have been filed with thecourt regarding their California taxes.If FTB is notified before the tax filingseason, the taxpayers’ joint estimated taxpayments can be allocated accordingly.In the absence of a formal court order,FTB will accept a statement showing theallocation of the payments along with thenotarized signatures of both taxpayers.Send the statement to:Joint Estimate Credit AllocationM/S F-225Taxpayer Services CenterFranchise Tax BoardPO Box 942840Sacramento CA 94240-0040The Franchise Tax Board applies anyestimated tax payments existing on anaccount to the first tax return processed.This policy can have an adverse impacton married taxpayers who divorce, or anycouples that begin to file separately afterthey have jointly filed estimated taxpayments.For example: Mr. and Mrs. Taxpayermake three estimated tax payments during1998. They then file for divorce and theyeach file a separate return for the 1998 taxyear. Mr. Taxpayer files his return inFebruary 1999 and claims all of theestimated tax payments as a credit againsthis tax liability. FTB will process Mr.Taxpayer’s return and apply the credits asrequested. This might include a refund of any excess payments available on theaccount.If Mrs. Taxpayer subsequently files areturn in March 1999 and claims the sameestimated payments, she will be advisedthat there are no payments available onher account.While this policy may not seem fair to thedisadvantaged spouse who clearly has aninterest in her share of the estimatepayments, it is impossible for FTB tokeep track of the marital status of itscustomers.The courts have also recognized thedifficulty faced by tax agencies in thisregard. In Warner v. Commissioner(9
Cir. 1973) 526 f.2d 1, the court noted thatthe government, “confronted by millionsof returns and an economy whichrepeatedly must be nourished by quick refunds, must first pay and then look.”
Changing an Address?Use Form FTB 3533
Taxpayers who have changedtheir home or businessmailing address, or theirbusiness location, may nowuse form FTB 3533, “Changeof Address.”This form is very similar tofederal Form 8822, “Changeof Address.”Generally, taxpayers needcomplete only one form FTB3533 to change their homeand business addresses.However, if the change alsoaffects the mailing address fortheir children who filedseparate returns, complete aseparate form FTB 3533 foreach child.If you are a representativefiling for the taxpayer, attacha copy of your power of attorney to the change of address form.Form FTB 3533 is availableat FTB’s www.ftb.ca.govInternet address, or you canwrite to:Tax Forms RequestFranchise Tax BoardPO Box 307Rancho Cordova, CA95741-0307

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