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State Tax Media Host Guide 2008

Franchise Tax Board


Public Affairs Office
Phone (916) 845-4800
Fax (916) 845-3800

Introduction

Taxes can be complex and confusing to your broadcast audience. We try to take the hassle out of tax time by offering
new and innovative ways to get tax help and file via the Internet. We appreciate your support in helping us get this
information to the people in your community who need it.

Frequently Asked Questions

The following questions might assist you in planning your interview. Feel free to use these questions, or choose
some of your own. These questions are among those that are most frequently asked by the public.

Q. What’s new this year? file forms 540 2EZ or the 540A. CalFile accepts
income of up to $310,000, itemized deductions,
Technology continues to make tax filing a lot easier. and some tax credits.

We are offering ReadyReturn, a tax filing method Our online 540 2EZ now does the math! Taxpayers
where we do the work for you! Piloted to 50,000 can fill in their information on this calculating tax
taxpayers a couple of years ago to rave reviews, form to print and mail to FTB.
ReadyReturn is available to nearly one million
taxpayers. Q. Who has to file?

If you can’t use ReadyReturn, we offer CalFile, the Surprisingly, not everyone has to file. Each year we
state’s no cost, direct-to-government, e-file program get thousands of tax returns from people who have
in both English and Spanish this year. CalFile is no filing requirements. We base our filing
available to the more than 6 million taxpayers who

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requirements on income amounts and exemption submission to us. We do most of the work, so
credits. For 2007, you will not have to file if: taxpayers benefit.
• You are single or head of household and your
total income was less than $14,138. Q. You talked earlier about CalFile being
• You are married and your total income was less available in both English and Spanish this
than $28,276.
year. What is it and why do we care?
These income threshold amounts are higher if you
Last year nearly 9.5 million, or 63 percent, of
have dependent or senior exemptions. Also, the
California taxpayers filed their tax returns
rules differ if you can be claimed as a dependent on
electronically. This year we expect these numbers to
someone else’s return.
go even higher.
Keep in mind that if you had withholding taken from
CalFile is our no-cost, direct from you, online filing
your pay or you made estimated tax payments, you
program. It allows people to e-file their returns to us
must file a tax return to get your refund.
for free without going through a third party. We are
excited to offer it in Spanish this year. Taxpayers
Q. What law changes affect tax filing this qualified to use CalFile include everyone who can
year? file the shorter tax forms such as the 540A and
5402EZ. That is, taxpayers with income up to
For the 2007 tax year, new state law requires $310,000—including those who itemize their
registered domestic partners to file their state tax deductions can use it. CalFile accepts many credits
returns using either the married filing jointly or such as the Renter’s Credit, the Child and
married filing separately status. Under prior state Dependent Care Expenses Credit, and the senior
law, they used the single or head of household filing and blind exemption credits.
status. The new state law will not impact filing
status for federal tax returns. Besides CalFile, there are many e-file software
packages available to help ease the tax filing
Estate filers: A new probate reporting law takes process. The programs walk you through a virtual
effect July 1, 2008, that requires estate tax interview and prompt you to take advantage of
representatives to notify us when a probate relevant tax credits. Links to many software vendors
begins. Frequently, heirs discover they owe can be found on our Website. You can e-file from
California income taxes after the estate has your home computer or through a professional tax
wrapped up affairs and distributed assets. Late preparer.
discovery of taxes owed requires heirs to pay the
estate’s debts after the fact. e-file is great because:

Q. Can you tell us more about • You’ll get a quick refund, normally within seven
ReadyReturn? days; faster if you use direct deposit. Taxpayers
who mail their returns in January and February
ReadyReturn benefits people with simple filing generally get their refunds in a couple of weeks.
scenarios by providing them with a completed tax Those who wait until late March or April can
return to file. The typical ReadyReturn customer is expect to wait 6-8 weeks.
single, earns wages from one employer, and takes • It’s accurate, and fewer errors mean it’s less
the standard deduction. To see if we have a likely you’ll hear from us later.
ReadyReturn waiting for you, check our Website at • You’ll know we got it. FTB sends a confirmation
www.ftb.ca.gov or call (800) 338-0505. almost immediately when we receive your tax
return.
ReadyReturn is based on a simple premise: we can • It’s free if you use CalFile. And, some
use the information that we already have, such as commercial software companies offer free e-file
W-2 information, to provide taxpayers with a for selected customers.
completed return for their final approval and

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Contributions made to these funds will reduce your
Q. Does FTB split refunds? refund or increase taxes owed. Taxpayers who
contribute to any of these funds can take a charitable
Yes. Individuals may request that their refund be contribution deduction on next year’s return if they
electronically deposited into more than one itemize their deductions.
checking or savings account. The purpose of
allowing taxpayers to “split” their refund is to Q. What is the tax gap?
encourage people to save at least some of their
refund money. Refunds can be split into a maximum The tax gap, the difference between taxes owed and
of two accounts such as: paid, continues to receive a lot of attention at both
• Checking the state and federal levels. We estimate it costs
• Savings California $6.5 billion a year in lost tax revenue.
• IRA Economists estimate that honest taxpayers pay
• Money Market nearly 20 percent more in taxes each year because
of the people who cheat.
Taxpayers should make sure their financial
institutions accept deposits into certain accounts. Most of the tax gap comes from people and
businesses that underreport their income or
overstate their deductions. And you can help solve
Q. What about other electronic services?
the tax gap. Report suspected tax fraud by calling
our Informant Hotline at:
You can do many tax chores over the Web including:
(800) 540-3453.
• Get your refund status.
• Check My FTB Account for your wage And we’re serious. This year, FTB published a list of
and the 250 largest tax delinquencies of both individual
withholding data, plus your balance due and corporate taxpayers that exceed $100,000.
or payments made—great for estimate
paying taxpayers. Other areas we are concentrating on include
• Use Web Pay to make payments via opening audits on California businesses that appear
your to incorporate in Nevada and other nontax states
bank account or by credit card. solely to avoid California taxes.
• Apply for payment plans.
• Email your tax questions. Q. If I want to prepare my own tax return,
• Find answers to tax questions.
how do I get started?
Q. What’s new on the tax forms? For many people, it’s not that hard. For those of you
who want to prepare your own taxes, remember: we
For 2007, taxpayers can contribute $4,000 to an are here to help. Some points to keep in mind are:
IRA, or $5,000 if over 50 years old.
• Gather the needed documents to prepare your
For 401(k) plans, taxpayers can contribute
taxes, such as W-2s and 1099s to report your
$15,500, or $20,500 if over 50 years old.
income. If you have tax deductions, gather those
documents as well, such as property tax
Q. What are voluntary contribution payment records, mortgage interest expense,
funds? charitable contributions, etc.
• Complete your federal tax return first. That’s
We have 11 charitable contribution funds on the tax because the California return starts with your
forms that benefit such causes as breast cancer federal adjusted gross income.
research, Alzheimer’s disease and emergency food
assistance program funds to name a few. Follow the instructions on the California tax return.
To arrive at California taxable income, you start with

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your federal adjusted gross income and then make Personal Exemption Credit
adjustments for differences between federal and This year’s credit totals $94 per person and $188
state law. for married couples. Seniors who are 65 years or
older and blind individuals receive double the
If you don’t know, don’t guess. Contact us for individual amount since they get a bonus
answers to your tax questions. exemption.

Q. Where can I get tax help? Dependent Exemption Credit


Families can reduce their tax bill by $294 for each
Internet/Toll Free Phone Services dependent.
Our Web address is ftb.ca.gov. Our toll-free
automated phone line is (800) 338-0505. Renter’s Credit
Single renters can claim a $60 credit if their
If you need to speak with a customer service adjusted gross income is $33,272 or less. Married
representative, our phone number is (800) 852- couples or head of household filers can claim $120
5711. We are ready to answer your questions from if their adjusted gross income is $66,544 or less.
7 a.m. to 6 p.m., Monday through Friday, except
state holidays. Child & Dependent Care Expenses Credit
For individuals who pay for dependent care to seek
Field Offices or maintain employment, this credit provides up to
If you want to see us in person, visit one of our six $1,050.
field offices located throughout California. Our office
hours are Monday through Friday, 8:00 a.m. to 5:00 Federal Earned Income Tax Credit
p.m. We offer walk-in service in Los Angeles, This is a federal incentive for low-income individuals
Oakland, Sacramento, San Diego, San Francisco, and families. Taxpayers earning less than $39,783
and Santa Ana. can qualify for a “refundable” credit that can total
up to $4,716.
Volunteer Income Tax Assistance
We also have lots of free help available through the “Refundable” means that you do not have to have a
Volunteer Income Tax Assistance and Tax tax liability to get a refund check from the
Counseling for the Elderly programs. government. Sadly, estimates show that
approximately one half million Californians missed
Q. What is the volunteer program? out on $850 million in refunds last year. If you think
you might qualify, visit the IRS’ Website at
This program is staffed with trained volunteers at www.irs.gov and search for EITC Assistant.
more than 1,100 sites throughout California. Our California has no comparable state credit.
volunteers provide free help with completing tax
forms to low-income, senior, disabled, and non- Q. What are the common errors and how
English speaking persons who need to file simple do I avoid them?
federal and state tax returns.
The most common errors are claiming the wrong
Many military bases also provide this service for the estimated tax payments, exemption credits, and
U.S. Armed Forces. Check our Website or call us to making tax computation errors. To avoid these
find the location nearest you. errors, we suggest:
• When claiming your estimated tax payments, be
Q. What tax credits are available to sure to verify that the amount you are claiming
reduce my tax bill? on your return matches what we have on record
by checking our Website. Select My FTB Account
We have several credits that many people can use to view your total before you file.
to lower their taxes.

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• When totaling your exemptions, be sure to add ensure you don’t have too much or too little tax
them correctly and transfer the total to the withheld.
correct line of the tax return.
• Finally, no matter how you file, we suggest that
you have your refund deposited directly into
your bank account. It’s faster, safer, and more
convenient than waiting for a check. Q. What do I do if I made an error on my
Q. What should I do if I find I cannot file return, forgot to claim a deduction, or
by April 15? received a late W-2?

No problem. All taxpayers get an automatic six- You can correct your California tax return by filing
month filing extension to October 15. Form 540X, Amended Individual Income Tax
Note: The extension is only for filing the return and Return. Amended returns do take longer to process
not for payment of any taxes that may be due. than original returns.

Q. What if I owe and can’t pay? For simple math errors or missing documents, you
generally do not need to file an amended return, as
First, always file on time and pay as much as you we typically correct math errors when we process
can with the return. This will save you money in the return. We will contact you about any missing
penalties and interest. We realize that unforeseen documents.
events occur that prevent you from paying your
taxes on time. Q. What should I do if I changed my
address during the year?
If you have a financial hardship and cannot pay your
taxes in full, you can generally arrange to make Notify us immediately! Either write or call, but be
monthly installment payments if you owe $25,000 sure we have your current address, even if you
or less and can repay it within five years. leave the state. You can use FTB form 3533,
Change of Address, to send us your new mailing
You can apply online and we can approve most of address.
these requests within a few days.
Q. Why do I have to file separate federal
For more information, call (800) 689-4776 or
complete FTB 3567, Installment Agreement and California returns?
Request—which is available on our Website.
Federal tax laws differ from California tax laws,
You may also want to consider paying by credit card. which is why you need to file separate tax returns
We accept Visa, MasterCard, Discover/NOVUS, and for each government agency. To make it as easy as
American Express. possible, California’s return starts with federal
• Use your touch-tone phone to call toll-free adjusted gross income and then makes
(888) 2PAY TAX or (888) 272-9829. adjustments for state differences.
• Or, visit Official Payments Corporation’s Website
at: www.officialpayments.com. Q. Do I have to attach a copy of my
federal return to my state return?
Keep in mind that service providers will charge you
a convenience fee for this service based on the If you file a 540 2EZ or 540A, the answer is always
amount charged. no. If you file a 540 long form and attach schedules
in addition to the Schedule A or B to your federal
We also have California and federal wage return, you must attach a complete copy of your
withholding calculators on our Website. It is a good federal return to the California Form 540.
idea to use these to help calculate the proper
amount of withholding from your paycheck to

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Q. What form do I file if I moved into or California residents are required to pay California
out of California? use tax on purchases made from out-of-state
sellers, such as by telephone, over the Internet, by
You need to complete a nonresident or part-year mail, or in person if:
resident return for the year you moved. • The seller does not collect California sales or
Nonresidents and part-year residents can use the use tax, and
540NR or the 540NR short form. The short form is • If you use, give away, store, or consume the item
for those whose income is made up mostly from in California.
wages. Visit the Board of Equalization’s Website at
www.boe.ca.gov for more details.
Depending on the laws of the state that you moved
to or from, you may have to file a return for that Q. What can I do if I think the FTB is
state too. If you are reporting the same income to being unreasonable?
two states, California has agreements with nearly all
the states to credit the tax paid on double-taxed Contact us. We equip our employees to help you
income. with your problems. If you feel that you are unable
to resolve your problem through normal channels,
Q. When or why does the Franchise Tax we have a Taxpayer Advocate. You can contact the
Board do audits? advocate’s office at:

We select returns for audit to verify the correctness Taxpayer Advocate Office
of income, exemptions, credits, and deductions. PO Box 157
Most returns are computer selected based on the Rancho Cordova, CA 95741-0157
information reported on the return and information
we receive from third parties. Phone: (800) 883-5910
Fax: (916) 845-6614
Here are a couple of trends we have seen from our
Audit program: Q. Any last minute thoughts you want to
leave with us today?
We are seeing high error rates regarding alimony
income and deductions. Our audit results show that ReadyReturn—Your taxes may already be done! Check
many taxpayers mistakenly consider all payments our Website to see if we have one waiting for you.
made to their ex-spouses as deductible alimony
payments. For example, taxpayers frequently e-fie and use direct deposit to get your tax refund
include nondeductible child support payments as back fast—generally within seven days. FTB’s
alimony deductions. On the other hand, many ReadyReturn and CalFile are no- cost, easy-to-use
alimony recipients do not consider the payments options.
from their ex-spouses as taxable income, and do
not report it. If you owe tax, consider using Web Pay, which allows
you to authorize a payment from your bank account
State Adjustments from IRS examinations – Did you on a specific date to satisfy a return balance due or
know that California law requires taxpayers to notify extension payment. Pay on or before April 15 to avoid
us within six months of receiving a final federal penalties and interest.
determination? The IRS sends FTB results of more
than 184,000 examinations each year. We issue After you file, be sure to keep a copy of your tax
audit assessments for all IRS adjustments to which return and all supporting records. We may request
California conforms. information from you regarding your tax return at
any time within the California statute of limitations
Q. What is use tax and how do I know if I period, which is generally four years from the due
owe it? date of the return.

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Tax Trivia: Did you know? Website: www.ftb.ca.gov

• Californians file more than 15 million tax returns • E-file your tax return for free with us using
annually and contribute $50 billion toward the CalFile or with an online filing service.
state’s general fund. • Check your refund status.
• Check your account status for payments made
• Last year 10 million Californians received or a balance due.
refunds averaging $850. • Choose a payment option, including WebPay.
• Apply for an installment payment plan.
• The most common tax error concerns estimate • Request an email reminder to file.
tax payments, followed by calculating the • Find answers to frequently asked questions.
number of exemptions incorrectly, and picking • Get tax forms and publications.
up the incorrect amount of tax from the tax • Research legal rulings, reports, statistics, and
tables. much more.

• Last year 9.6 million California returns, or about Field Offices


63 percent of the total, were filed electronically.
Los Angeles ........................................300 S. Spring St.
• The FTB was established in 1929 to administer Oakland.....................................................1515 Clay St.
the new Bank and Corporation Franchise Tax Sacramento………… ..................... 3321 Power Inn Rd.
Act. The first year California taxpayers had to file San Diego ................................. 7575 Metropolitan Dr.
a state tax return was 1935. San Francisco…………….........................121 Spear St.
Santa Ana ...............................600 W. Santa Ana Blvd.
Tax Assistance Telephone Numbers
Field office hours are Monday through Friday, 8 a.m.
Automated Toll-Free Phone Service: (800) 338-0505 to 5 p.m.

• Listen to recorded answers to frequently asked tax


questions.
• Order state tax forms.
• Find out about your refund status.
• Verify your balance due/payments made.

Taxpayers can refer to the back of their tax booklet for


instructions on using our automated phone service.

General Toll-Free Phone Service: (800) 852-5711

If you prefer to speak to someone, call us on our


general toll-free tax assistance line open Monday
through Friday from 7 a.m. to 6 p.m.

Federal Tax Questions: (800) 829-1040

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