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Changes to 2006 Form

2006 Updates to Publication 1001-Supplemental Guidelines to California Adjustments

Revision Date: 09/29/07

Revision Details: Federal law provides an exclusion from gross income, for survivor benefits attributable to service by a public safety officer who is killed in the line of duty before January 1, 1997, California does not allow this exclusion.

  • Page 11 of Publication, second and third columns, 3rd paragraph, page 21 of Package X

It should read:

Federal law provides an exclusion from gross income for survivor benefits attributable to service by a public safety officer who is killed in the line of duty before January 1, 1997.

Enter on Schedule CA (540 or 540NR), line 21f, column C, the amount of survivor benefits that qualifies for the federal exclusion.

This revision has a tax liability. If taxpayers followed our current instructions they would under report their survivor benefits, resulting in an incorrect tax liability. This revision allows the taxpayers to report the correct amount of survivor benefits, resulting in a correct tax liability based on those benefits.

The revised internet version is available for download.


2006 Updates to Publication 1001

Revision Date: 01/18/07

Revision Details: Instructions

The Publication 1001 states that there is a state-fed difference for reporting the kiddie tax, but do not provide clear instructions for the adjustments. The publication states what adjustments are needed on the child and parent's California returns. However, there are no instructions about where to get the numbers for the adjustments. The revised language informs the taxpayers where to get the amounts that will be used on their California returns.

  • Page 3, second column, third paragraph, under item "Interest income from children":

It should read:

If for Federal purposes you make the election to report a child's interest income on the parents return, and for California you did not make the same election, the children are required to file a California state income tax return if they meet the minimum income tax reporting requirements.

  • Page 3, third column, first paragraph, under item "Interest income form children":

It should read:

For the child's California return:

  • If you are filing FTB form 540 2EZ, enter the amounts form your 1099's (Schedule CA is not necessary).
  • If you are filing FTB form 540, 540A, or 540NR, enter the amounts of the child's interest income for ages 14 through 17 on Schedule CA (540 or 540NR), line 8, column C, as reported on your 1099's.

For the parent's California return:

Enter the amount of your child's interest income for ages 14 through 17, on Schedule CA (540 or 540NR), line 8, column B. The amounts included on Schedule CA are from federal Form 8814, line 12.

  • Page 3, second column, third paragraph, under item "Dividend income from children":

It should read:

If for Federal purposes you made the election to report a child's dividend income on the parents' return, and for California you did not make the same election, the children are required to file a California state income tax return if they meet the minimum income tax reporting requirements.

  • Page 3, third column, first paragraph, under item "Dividend income from children":

It should read:

For the child's California return:

  • If you are filing Form 540 2EZ, enter the amounts from your Form 1099's (Schedule CA is not necessary).
  • If you are filing Form 540, 540A, or 540NR, enter the amount of the child's dividend income for ages 14 through 17 on Schedule CA (540 or 540NR), line 9, column C, as reported on your Form 1099's.

For the parent's California return:

Enter the amount of your child's dividend income for ages 14 through 17, on Schedule CA (540 or 540NR), line 9, column B. The amounts included on Schedule CA are from federal Form 8814, line 9.

  • Page 8, second column, second paragraph, under item "Capital gain distribution for children":

It should read:

If for Federal purposes you make the election to report a child's capital gain distribution on the parents return, and for California you did not make the same election, the children are required to file a California state income tax return if they meet the minimum income tax reporting requirements.

  • Page 8, third column, first paragraph, under item "Capital gain distribution for children":

It should read:

For the child's California return:

  • If you are filing Form 540 2EZ, enter the amounts from your Form 1099's (Schedule CA is not necessary).
  • If you are filing Form 540, 540A, or 540NR, enter the amount of the child's capital gain distribution for ages 14 through 17 on Schedule CA (540 or 540NR), line 13, column C, as reported on your Form 1099's.

For the parent's California return:

Enter the amount of your child's capital gain distribution for ages 14 through 17, on Schedule CA (540 or 540NR), line 13, column B. The amounts included on Schedule CA are from federal Form 8814, line 10.

These revisions are in printed products 2006 Publication 1001, pages 3 and 8; 2006 Package X, pages 13 and 18.

The revised internet version is available for download.


2006 Updates to Publication 1001-Supplemental Guidelines to CA Adjustments

Revision Date: 12/29/06

Revision Details: Instructions

President Bush signed Tax Relief and Health Care Act which extended the federal deductions for "Educator expense", "Tuition and Fees Deduction", and "Sales Tax Deduction." California does not conform to the Educator expense and Tuition and Fees Deductions. Therefore an adjustment needs to be made on the Schedule CA (540NR) and (540).

  • Page 11 ans 12 of 2006 Publication 1001, and 2006 Package X, pages 21 and 22.

It should read:

Page 11 - Include this bullet in between Foreign-earned income and housing expense exclusion and Certain business expenses of reservists, performing artists, and fee-basis governmental officials bullets:

Column 1 - Educator expense

Column 2 - Federal law allows a deduction for teachers, instructors, counselors, principals, or aides for K-12 grades. California has not conformed.

Column 3 - Enter the amount on Schedule CA (540 or 540NR), line 23, column B, with the notation "Educator Expense".

It should read:

Page 12 - Include this bullet in between Certain business expenses of reservists, performing artists, and fee-basis governmental officials and Domestic production activities bullets:

Column 1 - Tuition and fees deduction

Column 2 - Federal law allows a deduction from income up to $3,000 for qualified higher education expenses paid. California does not conform.

Column 3 - Enter the amount on Schedule CA (540 or 540NR), line 35 with the notation "Tuition and Fees Deduction". If entries in column B are required for both "Domestic Production Activities Deduction" and "Tuition Fees Deduction" add a statement in the space provided below line 35 showing the break down for each adjustment.

These revisions have minimal tax impact. By not making the adjustments to deductions taxpayers would be taking a larger deduction than is allowable under California law. This would result in taxpayers understanding their income and ultimately understanding their tax liability

The revised internet version is available for download.

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