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Tax News Corrections to tax forms, publications, instructions

Corrections

Form 540-ES, Estimated Tax for Individuals, Instructions (contained within California 540A, 2001 California Resident Income Tax Return-Special Edition for Seniors), pages 37 and 38 are incorrect.

The incorrect pages appear within the California Form 540A, 2001 Special Edition for Seniors and in the first release of the CD ROM. The corrected version will appear in the second release of Package X on CD ROM. The Internet version is correct.

Correction

California 540NR, 2001 Nonresident or Part-Year Booklet

On page 11, step 4 - Taxable Income, the first sentence appearing under Military Pay Adjustment should read:

If you are serving on active duty military and domicile in Arizona, Idaho, Louisiana, Nevada, Texas, New Mexico, Washington, Wisconsin, or Puerto Rico (community property states), AND your spouse is a California resident, you are entitled to an adjustment of � of your military pay.

This error appears in the California 540NR,2001 Package X, and in the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

Form FTB 3800, Tax Computation of Children Under Age 14 with Investment Income

On page 1, part II, line 10, it should read:

Enter the parent's tax from Form 540, line 20; Form 540A, line 17; or Telefile Tax Record, in the box labeled "Tax." Long or Short Form 540NR filers, see instructions. Do not include any tax from FTB 3803, 2001 Parents' Election to Report Child's Interest and Dividends.

This error appears in the 2001 Package X and in the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

Form FTB 3805Z, 2001 Enterprise Zone Business Booklet

On page 4, part I - Hiring Credit, column 3, the first paragraph should read:

Effective January 1, 2001, the established minimum wage was $6.25 per hour. Effective January 1, 2002, the minimum wage increased to $6.75 per hour. For purposes of computing the EZ credit, 150 percent of the minimum wage is $9.37 per hour ($10.12 beginning January 1, 2002).

This error appears in the 2001 Package X and the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

Form FTB 3805Z,2001 Enterprise Zone Business Booklet

On page 4, part I - Hiring Credit, column 3, the fourth paragraph should read:

Effective January 1, 2001, the established minimum wage was $6.25 per hour. Effective January 1, 2002, the minimum wage increased to $6.75 per hour. For purposes of computing the EZ hiring credit, 202 percent of the minimum is $12.62 per hour ($13.63 beginning January 1, 2002).

This error appears in the 2001 Package X and the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

Form FTB 3807, 2001 Local Agency Military Base Recovery Area Deduction Business Booklet

On page 4, column 2, the first paragraph should read:

Where the California minimum wage is higher than the federal minimum wage, the California minimum wage is used for purposes of computing the LAMBRA hiring credit. Effective January 1, 2001, the established minimum wage was $6.25 per hour. Effective January 1, 2002, the minimum wage is increased to $6.75 per hour. For purposes of computing the LAMBRA hiring credit, 150 percent of the minimum wage is $9.37 per hour ($10.12 beginning January 1, 2002.)

This error appears in the 2001 Package X and the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

Form FTB 3808, 2001 Manufacturing Enhancement Area Business Booklet

On page 3, column 3, the 5th paragraph should read:

Where the California minimum wage is higher than the federal minimum wage, the California minimum wage is used for purposes of computing the MEA hiring credit. Effective January 1, 2001, the established minimum wage was $6.25 per hour. Effective January 1, 2002, the minimum wage is increased to $6.75 per hour. For purposes of computing the MEA hiring credit, 150 percent of the minimum wage is $9.37 per hour ($10.12 beginning January 1, 2002).

This error appears in the 2001 Package X and the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

Form FTB 3809, 2001 Targeted Tax Area Deduction Booklet

On page 4, column 1, the 6th paragraph should read:

Where the California minimum wage is higher than the federal minimum wage, the California minimum wage is used for purposes of computing the TTA hiring credit. Effective January 1, 2001, the established minimum wage was $6.25 per hour. Effective January 1, 2002, the minimum wage is increased to $6.75 per hour. For purposes of computing the TTA hiring credit for 2001, 150 percent of the minimum wage is $9.37 per hour ($10.12 beginning January 1, 2002).

This error appears in the 2001 Package X and the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

FTB Publication 1005, 2001 Pension and Annuity Guidelines

On page 4, column 1, entitled: Individual Retirement Arrangements (IRAs), under the section entitled 1987 through 2001, the last sentence should read:

An elective deferral of up to $6,500 made be made to a SIMPLE IRA.

This error appears in the 2001 Package X and the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

Form 9000, 2001 Homeowners Assistance Claim Booklet

Page 14, Homeowner Assistance Schedule, should read:

If your total income is from $11,164 to $11,750, your percentage of assistance is 86 percent.

This error appears in the print version of the 2001 Homeowners Assistance Claim Booklet. The Internet version is correct.

Correction

Schedule D, California Capital Gain or Loss Adjustment, line 3 should read:

Capital gain distributions (federal Form 1099-DIV, box 2a minus box 2e)

Editor's note: Without this correction, taxpayers will be subtracting Unrecaptured Section 1250 gain (box 2d) from the total capital gain from box 2a instead of correctly subtracting the Section 1202 gain (box 2e) from the total capital gain from box 1a.

This error appears in the print version of the 2001 Personal Income Tax Booklet, 2001 Nonresident or Part-Year Booklet and the stand alone Schedule D. The Internet versions are correct.

Correction

Schedule P (541), Alternative Minimum Tax and Credit Limitations - Fiduciaries

The instructions on page 7, entitled: Credit Table, Offset Tax Section has errors relating to the B2 and B3 listings. All B2 listings should be changed to B1 and all B3 listings should be changed to B2.

These errors appear in the instructions of the stand alone, print version of the schedule. The print and CD-ROM versions of the 2001 Package X are correct. The Internet version is also correct.

Correction

Form FTB 3805Z, Enterprise Zone Deduction and Credit Summary

On side 2, Worksheet VII, Computation of Credit Limitations - Enterprise Zones, line 4 should read:

4 Enter the enterprise zone NOL deduction from Worksheet VI, Section C, line 24, column (c).

This error appears in the 2001 Enterprise Zone Business Booklet, 2001 Package X, and in the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

Form FTB 3807, Local Agency Military Base Recovery Area Deduction and Credit Summary

On side 2, Worksheet VI, Computation of Credit Limitations - LAMBRA, line 4 should read:

4 Enter the LAMBRA NOL deduction from Worksheet V, Section C, line 14, column (c).

This error appears in the 2001 Local Agency Military Base Recovery Area Business Booklet, the print version of the 2001 Package X, and the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

Form FTB 5805F, Underpayment of Estimated Tax by Farmers and Fishermen

On line 9, Part I, Figure Your Underpayment, should read:

2000 tax after credits from Form 540, line 34; Form 540NR, line 43; or Form 541, line 25 (If you did not file a return for 2000 or if your 2000 tax year was less than 12 months, do not complete lines 9 - 11. Instead, enter the amount from line 6 on line 12.)

This error appears in 2001 Package X and in the first release of the CD ROM. The corrected version will appear in the second release of the CD ROM. The Internet version is correct.

Correction

2001 S Corporation Tax Booklet

On page 33, line 8, Deductions -Expense deduction for recovery property, the first line should read:

The maximum expense deduction for recovery property you can claim from all sources is $24,000. (IRC Section 179 deduction).

Schedule K-1 (100S) Shareholders' Instructions

On page 3 of the instructions, line 8, Deductions-Expense deduction for recovery property, the first line should read:

The maximum expense deduction for recovery property you can claim from all sources is $24,000. (IRC Section 179 deduction)

These errors appear in the 2001 Package X. The information is correct in the first release of the CD ROM. The Internet version is also correct.

Correction

Schedule K-1 (541), Beneficiary's Share of Income, Deductions, Credits, etc

On line 10, Deductions in the final year of the estate or trust, Section A: Excess deductions on termination. (Attach computation), the solid line separating lines 10a and 10b should also cross columns (b), (c), (d), and (e).

This error appears in the 2001 Package X and the first release of the CD ROM. The Internet version is correct.

Correction

FTB Publication 1067, Guidelines for Filing a Group Form 540NR

On Page 3, Column 1, under Section N- Instructions for Completing Group Nonresident Return, line 4a has been revised to read as follows:

Enter the total distributive share of California source income from Schedule 1067A, Part I, column (c), one line 25.

This error appears in the 2001 Package X and in the first and second release of the Package X on CD Rom. The Internet version is correct.

Corrections to 2000 California tax forms, instructions, and booklets

Form FTB 5805F, Underpayment of Estimated Tax by Farmers and Fishermen

On Line 9, Part I, Figure Your Underpayment, line 9 should read:

l. 1999 tax after credits from Form 540, line 34; Form 540NR, line 43; or Form 541, line 25 (If you did not file a return for 1999 or if your 1999 tax year was less than 12 months, do not complete line 9 - line 11. Instead, enter the amount from line 6 on line 12.)

This error appears in the 2000 Package X and CD Rom. The Internet version is correct.