SACRAMENTO — The Franchise Tax Board announced Jan. 4 it is now accepting 2011 state tax returns. Also, FTB provides the following updates on law changes and filing services.
Final filing date is Tuesday, April 17. FTB will consider tax returns and payments mailed or submitted on April 17, as timely.
Individual tax rate decreases — The top tax rate dropped one-quarter percent from 9.55 percent to 9.3 percent due to the expiration of tax increases enacted two years ago.
Standard deduction — The standard deduction for single or filing separately tax statuses increased from $3,670 to $3,769. For joint, surviving spouse, or head of household filers, it increased from $7,340 to $7,538.
Exemption credit increases — The dependent exemption credit increased from $99 to $315 per dependent. The personal exemption amount for single, filing separately, and head of household filers increased from $99 to $102. For joint or surviving spouses, it increased from $198 to $204.
Child and Dependent Care Expenses Credit — Beginning in 2011, this credit is non-refundable. Individuals who pay for dependent care to seek or maintain employment may qualify for this credit worth up to $1,125.
Check your county tax bill when deducting real estate taxes — FTB advises taxpayers to examine their county property tax bill to determine the deductible and nondeductible portions to report on their itemized deductions. Taxpayers should not rely on the federal Form 1098, Mortgage Interest Statement, which often reflects the total amount paid to the county, including other parcel taxes and fees that are not deductible.
Starting in 2012, FTB plans to add reporting requirements related to real estate deductions such as property parcel number, deductible, and nondeductible amounts. For samples of all counties’ property tax bills and guidance on determining which taxes and fees are deductible, visit ftb.ca.gov and search for real estate tax.
Use tax look-up table — New this year, taxpayers can use a “look-up” table to report their use tax obligations on their state return. The estimated amount of use tax due is based on the individual’s adjusted gross income. A use tax liability typically occurs when a California consumer or business purchases tangible items for their own use from an out-of-state retailer that does not collect the California use tax. Taxpayers can go to boe.ca.gov for more details.
New Jobs tax credit — This incentive provides a credit of up to $3,000 for each added qualified full-time employee hired by a qualified small business employer. Funding is limited to $400 million. As of Jan. 1, $324 million remains available. The credit must be claimed on a timely-filed original (not amended) 2011 return received before the $400 million limit is exhausted.
In general, employers qualify for the credit if they employed 20 or fewer employees in the prior year. They must have a net increase in qualified full-time employees in 2011 compared to the number of full-time employees employed in the prior year.
Net operating losses suspended — For 2010 and 2011, net operating losses from prior years cannot be deducted by certain taxpayers. The net operating loss suspension rules do not apply to taxpayers with net income of less than $300,000 or with disaster loss carryovers.
Voluntary Contribution Funds — Taxpayers can contribute to one or more charitable causes directly from the state tax form. New on the 2011 tax return are the:
· Municipal Shelter Spay-Neuter Fund
· ALS/Lou Gehrig’s Disease Research Fund
· Child Victims of Human Trafficking Fund
Free Do-it-Yourself Services — FTB encourages taxpayers and practitioners to explore its many self-service applications available through FTB’s website:
· Free online filing in minutes — FTB has two free e-file programs: ReadyReturnis for taxpayers who used the single or head of household filing status the prior year, had one employer, claimed no more than five dependents, and took the standard deduction. ReadyReturn pulls data from wage reports and past tax returns to generate a completed return online. For more complex filing needs, CalFile is the state’s other no-cost, easy-to-use e-file option that is available to more than 6.4 million taxpayers. CalFile accepts taxpayers with income of up to $333,134, itemized deductions, and some tax credits.
· Pay Taxes Online – FTB’s Web Pay allows individuals and businesses to authorize a payment from their bank account to pay their return balance due or extension payment. Payment must be made on or before April 17, to avoid penalties and interest. Taxpayers can also make estimated tax or any bill payments online, and sign up for email reminders of upcoming estimate payment due dates. Taxpayers can schedule payments up to one year in advance. For a fee, taxpayers can pay their taxes with their American Express, Discover/NOVUS, MasterCard, and Visa cards.
· Request a Monthly Payment Plan – FTB offers monthly installment payment plans to people experiencing a financial hardship. Taxpayers who owe less than $25,000 and can repay their balance owed within five years generally qualify. To see if you qualify and to sign up, go to ftb.ca.gov and select installment agreement request.
· Get Answers to Frequently Asked Questions – Find answers to questions about various tax topics such as return filing requirements, tax credits, and the requirements to be able to use the Head of Household filing status online at ftb.ca.gov.
· Phone service – FTB provides automated toll-free phone service at 800.338.0505. To speak with a customer service representative, FTB staffs its general toll-free phone line, 800.852.5711, from 7 a.m. to 5 p.m., weekdays excluding state holidays.
· Field Offices – FTB has six regional field offices that provide walk-in service from 8 a.m. to 5 p.m., weekdays in Los Angeles, Oakland, Sacramento, San Diego, San Francisco, and Santa Ana. For directions, go to ftb.ca.gov and click on the Contact Us tab.
· Services Available in Spanish – FTB offers many services in Spanish including free filing options, forms, publications, refund status, and answers to frequently asked questions.
Federal Earned Income Tax Credit (EITC) – This is a federal incentive for low-income individuals and families. Taxpayers earning less than $49,078 can qualify for a refundable credit that can total up to $5,751. “Refundable” means that you do not have to have a tax liability to get a refund check from the government. If you think you might qualify, go to the IRS website at irs.gov and search for EITC Assistant. California has no comparable state credit.
Federal Small Business Health Care Tax Credit — This federal incentive helps small businesses and small tax-exempt organizations afford the cost of providing health care for their employees. The credit is worth up to 35 percent of a small business’ premium costs. For more information, go to irs.gov and search for affordable care act tax provisions.
FTB using Social Media — FTB is using Twitter, Facebook, and YouTube to share information regarding the coming state income tax filing season. Three instructional YouTube videos highlight the ease of using CalFile, ReadyReturn, and FTB’s recently updated MyFTB Account feature. “California Tax Tips” offer tips about taxes in videos of 60 seconds or less.
Record keeping — Keep a copy of your state tax returns and all supporting records. FTB may request information from you regarding your tax return at any time within the California statute of limitations period, which is generally four years from the return’s due date.
Keep your address current – Remember to update your address if you move. This year FTB had $17 million in tax refunds returned as undeliverable because FTB did not have the recipient’s current address on file. Change your address online using the Access Your Account feature or call 800.852.5711.