New standard deductions, exemptions, contributions, and more.
Standard Deductions
Single, or married/RDP filing separate – Increased from $4,129 to $4,236.
Married/RDP filing joint, qualified widower, or head of household – Increased from $5,258 to $8,472.
Personal Exemptions
Single, married/RDP filing separate, or head of household – Increased from $111 to $114.
Married/RDP filing joint or qualified widower – Increased from $222 to $228.
Dependent Exemptions
Increased from $344 to $353.
Voluntary Contributions – Taxpayers may contribute to the following five new funds:
California YMCA Youth and Government Voluntary Tax Contribution Fund
Habitat for Humanity Voluntary Tax Contribution Fund
California Senior Citizen Advocacy Voluntary Tax Contribution Fund
Native California Wildlife Rehabilitation Voluntary Tax Contribution Fund
Rape Backlog Kit Voluntary Tax Contribution Fund
Wrongful Incarceration Exclusion – California law conforms to federal law excluding from gross income certain amounts received by wrongfully incarcerated individuals for taxable years beginning before, on, or after January 1, 2018. If you included income for wrongful incarceration in a prior taxable year on your California personal income tax return, you can file an amended California personal income tax return for that year. If the normal statute of limitations has expired for that year, you must file a claim for refund for state income taxes paid on that income before January 1, 2019.
College Access Tax Credit – For taxable years beginning on or after January 1, 2017, and before January 1, 2023, the College Access Tax Credit (CATC) is available to taxpayers awarded the credit from the California Educational Facilities Authority (CEFA).The credit is 50 percent of the amount contributed by the taxpayer for the taxable year to the College Access Tax Credit Fund. The amount of the credit is allocated and certified by the CEFA. For more information go to the CEFA website at treasurer.ca.gov and search for catc.
Schedule X, California Explanation of Amended Return Changes – For taxable years beginning on or after January 1, 2017, Schedule X has replaced Form 540X, Amended Individual Income Tax Return.
Improper Withholding on Severance Paid to Veterans – The Combat?Injured Veterans Tax Fairness Act of 2016 gives veterans who retired from the Armed Forces for medical reasons additional time to claim a refund if they had taxes improperly withheld from their severance pay. If you filed an amended return with the IRS on this issue, you have two years to file your amended California return.
California Earned Income Tax Credit (EITC) – For taxable years beginning on or after January 1, 2017, California conforms to the federal definition of earned income to include net earnings from self-employment. Earned income thresholds have also increased. Your client may now qualify for the refundable EITC if they have earned income of less than $22,323. Additional information can be found on form FTB 3514, California Earned Income Tax Credit.
Extension Due Date – For taxable years beginning on or after January 1, 2017, the extension period for a partnership and limited liability company (LLC) taxed as a partnership to file its tax return has changed from six months to seven months.
Federal Form 8975 and Schedule A (8975) Filing Requirement – California taxpayers whose taxable year begins on or after June 30, 2016, and who are required to file the federal forms listed below with the IRS, must also attach copies of these forms to the California tax return:
Federal Form 8975, Country?by?Country Report
Federal Schedule A (8975), Tax Jurisdiction and Constituent Entity Information.
For additional information, refer to the Instructions for Form 8975, Revenue Procedure 2017?23, 2017?7 Internal Revenue Bulletin 915.
Principal Business Activity (PBA) Codes – The PBA Codes have been updated and revised to reflect updates to the North American Industry Classification System (NAICS). The updated PBA codes can be found in any one of the business entity tax booklets.
New Donated Fresh Fruits or Vegetables Credit – For taxable years beginning on or after January 1, 2017, and before January 1, 2022, qualified taxpayers may claim the new Donated Fresh Fruits or Vegetables Credit. This tax credit is for donations of fresh fruits or vegetables made to California food banks. The amount of the tax credit is 15 percent of the qualified value of the donated item, based on weighted average wholesale price. The credit may be claimed only on a timely-filed original return. However, any credit not used in the taxable year may be carried forward for up to seven years. For more information, get form FTB 3814, New Donated Fresh Fruits or Vegetables Credit.
Paperless Schedule K-1 – Effective January 1, 2018, we discontinued the Paperless Schedules K-1 (565 and 568) program due to the increasing participation of our business e-file program. For more information regarding the California business e-file program, go to ftb.ca.gov and search for business efile.
Veterans’ Organizations – Effective January 1, 2018, veterans’ organizations that are federally tax-exempt under Internal Revenue Code (IRC) Section 501(c)(19) may submit a copy of their IRS tax?exempt determination letter to us to establish their state income tax exemption. Veterans’ organizations that are not issued a federal determination letter can still file for an application to obtain a California tax-exempt status.
