What's New

01.05.2016

Head of Household (HOH) Filing Status 

Beginning with the 2015 tax year, taxpayers must now complete and attach form FTB 3532, Head of Household Filing Status Schedule, to their tax return. The new schedule helps taxpayers determine if they qualify for the HOH filing status at the time of filing their tax returns, simplifies and reduces the questions asked for ease of understanding, and assists taxpayers to complete the form correctly. The new schedule will also substantially reduce the volume of audit letters we currently send. Credits Currently, we are auditing credits that expired, but claimed on personal income tax returns for 2012.
Some of the expired credits claimed include:

 • Code 171 Ridesharing Credit. 
• Code 174 Recycling Equipment. 
• Code 180 Solar Energy. 
• Code 184 Political Contribution. 
• Code 193 Employer Ridesharing. 
• Code 178 Water Conservation. 

Some of the credits have no carryover provisions and were only in place for a specified time frame. Credits, such as the Political Contribution credit, are disallowed to the extent they exceed the allowable limit. Employee Business Expenses We are also reviewing and conducting audits of personal income tax returns claiming unreimbursed employee business expenses (EBE) for tax year 2012. We will ask taxpayers that claimed these expenses to provide documentation to substantiate their employer’s reimbursement policy and deductions claimed to determine if their expense is allowable. 

In addition, 46,000 educational letters were sent to taxpayers in November 2014. The focus of these letters was to remind taxpayers of their continuing responsibility to file accurate tax returns, to include only deducting amounts they are legally entitled to Tax News January 2016 11 claim, and to maintain and provide appropriate documentation and substantiation for all deductions and credits claimed. For more information about allowable unreimbursed employee business expenses, please refer to the IRC Section 162 and Treasury Regulations Section 1.162-1(a). In addition, the Internal Revenue Service (IRS) has many publications on this issue including:
IRS Tax Tip 2015-45, Six Things You Should Know about Employee Business Expenses and Tax Topic 514 - Employee Business Expenses.
Taxpayers are encouraged to review the referenced information provided above and review claimed unreimbursed employee business expense deductions on their tax returns. If taxpayers claimed expenses that do not qualify, they should file amended tax return(s), if appropriate. 


California Officially Opens State Tax Season

Sacramento: The Franchise Tax Board (FTB) today announced it is accepting 2015 state tax returns for a filing season that extends through April 18, three days beyond the traditional deadline because of a federal holiday.

Earned Income Tax Credit

Starting with calendar year 2015 tax returns, California is offering its own Earned Income Tax Credit (Cal EITC). This credit is in addition to the existing federal EITC.

The Cal EITC is refundable, meaning that taxpayers will receive a refund if the credit is greater than taxes owed. The credit is available to California households with adjusted gross incomes of less than $6,580 if there are no qualifying children, less than $9,880 with one qualifying child, or less than $13,870 with two or more. 

Unlike the federal EITC, California’s credit is based only on income reported on a W-2 form, such as wages, salaries, and tips, and was also subject to California withholding. Income from self-employment cannot be used to qualify for the state credit.

Taxpayers can learn more about the credit at caleitc4me.org. 

Standard Deduction and Exemption Credit Increases

The standard deduction for single or filing separately tax statuses for the 2015 tax year increased to $4,044. For joint, surviving spouse, or head of household filers, the deduction grew to $8,088.

The dependent exemption credit increased to $337 per dependent. The personal exemption amount for single, filing separately, and head of household filers increased to $109. For joint or surviving spouses, the exemption grew to $218.

IRS 2016 Tax Season Opens Jan. 19 for Nation’s Taxpayers

Following a review of the tax extenders legislation signed into law last week, the Internal Revenue Service announced today that the nation’s tax season will begin as scheduled on Tuesday, Jan. 19, 2016.

The IRS will begin accepting individual electronic returns that day. The IRS will begin processing paper tax returns at the same time. There is no advantage to people filing tax returns on paper in early January instead of waiting for e-file to begin.

“We look forward to opening the 2016 tax season on time”

The filing deadline to submit 2015 tax returns is Monday, April 18, 2016, rather than the traditional April 15 date. Washington, D.C., will celebrate Emancipation Day on that Friday, which pushes the deadline to the following Monday for most of the nation. (Due to Patriots Day, the deadline will be Tuesday, April 19, in Maine and Massachusetts.)

The IRS urges all taxpayers to make sure they have all their year-end statements in hand before filing, including Forms W-2 from employers, Forms 1099 from banks and other payers, and Form 1095-A from the Marketplace for those claiming the premium tax credit.

Although the IRS begins accepting returns on Jan. 19, many tax software companies will begin accepting tax returns earlier in January and submitting them to the IRS when processing systems open.

Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund. The IRS anticipates issuing more than nine out of 10 refunds in less than 21 days

 


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