CALIFORNIA INDIVIDUAL
INCOME TAX COURSE
2010
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Table of Contents
Course Objectives .................................................................................................................................. i
California Income Tax Return – Resident ............................................................................................. 1
FILING REQUIREMENTS ..........................................................................................................................1
Other situations when an individual must file ...................................................................................1
Filing due dates for taxpayers .............................................................................................................2
Taxpayers residing or traveling abroad ..............................................................................................2
FILING STATUS ........................................................................................................................................2
EXEMPTIONS ............................................................................................................................................2
CREDITS ...................................................................................................................................................3
Nonrefundable Renter's Credit ............................................................................................................3
Credit for Joint Custody Head of Household - Code 170 ...................................................................3
Credit for Senior Head of Household - Code 163................................................................................3
Prison Inmate Labor Credit - Code 162 ..............................................................................................4
Enterprise Zone Employee Credit - Code 169 .....................................................................................4
Credit for Child Adoption Costs - Code 197 ........................................................................................4
Employer Child Care Program Credit - Code 189 ...............................................................................4
Employer Child Care Contribution Credit - Code 190 .........................................................................4
Enterprise Zone Hiring and Sales and Use Tax Credit - Code 176 .....................................................4
Disabled Access for Eligible Small Businesses - Code 205 ................................................................4
Donated Agricultural Products Transportation - Code 204 ...............................................................4
Enhanced Oil Recovery - Code 203 .....................................................................................................4
Research Credit - Code 183 .................................................................................................................5
Low-Income Housing Credit - Code 172 .............................................................................................5
Credit for Prior Year Alternative Minimum Tax - Code 188 ...............................................................5
Other State Tax Credit - Code 187 ......................................................................................................5
Target Tax Area (TTA) Hiring and Sales or Use Tax Credits – Code 210 ..........................................5
Natural Heritage Preservation - Code 213..........................................................................................6
New Home Credit Code 219 .................................................................................................................6
New Jobs Credit – Code 220 ................................................................................................................6
Return Preparation — Resident (Form540) ...........................................................................................7
California Adjustments (Schedule CA) ...................................................................................................8
Adjustments to federal itemized deductions ....................................................................................... 10
Estimated Tax for Individuals ............................................................................................................... 12
California Income Tax Return - Nonresident & Part Year Resident (Form 540NR) ........................... 13
FILING REQUIREMENTS ........................................................................................................................ 13
How Nonresidents and Part-Year Residents are Taxed ................................................................... 13
Income attributed to California ......................................................................................................... 13
California adjustments (Schedule CA) .............................................................................................. 14
Income adjustments .......................................................................................................................... 14
Return Preparation - Nonresident and Part-Year Resident (Form 540) ......................................... 15
California Income Tax Return – 2009 Update .................................................................................... 16
Appendix A – Differences Between Federal and California Law ......................................................... 18
Appendix B – Which Form to Use ....................................................................................................... 19
Appendix C – 2009 Tax Rate Schedules ............................................................................................. 20
Continuing Education ......................................................................................................................... 21
Course Objectives
The objective of this course is to update the student to the 2009 California tax laws. The student will learn the
differences between federal and California tax laws.
This course is taught at the intermediate level and the student should have already completed a 60 hour
“qualifying education” course before taking this course.
At the end of this course is a course evaluation. We would appreciate your feedback to this course and
suggestions on other subject matters you would like included in this course or for us to develop in another
course.
Note: The IRS has not yet announced when they will start requiring tax preparers to have 15 hours of continuing
education credits. The earliest starting time will probably be sometime next year or 2012. Any continuing
education credits completed this year will not count. Our course will be approved by the IRS by the time they
start requiring continuing education credits.
i
California Income Tax Return – Resident
FILING REQUIREMENTS
Individuals must file a California income tax return if either their California gross income or their California
adjusted gross income (AGI) was more than the amount shown for their filing status, age, and number of
dependents.
Filing
Status
Age on the last day of year
California Gross Income
Single or
Head of
household
Under 65
65 or older
0
14,622
19,522
Married/R
DP filing
jointly
Married/R
DP filing
separately
Qualifying
widow(er)
Under 65 (both spouses/RDPs)
65 or older (one spouse/RDP)
65 or older (both spouses/RDPs)
29,245
34,145
39,045
Dependents
1
2 or more
17,889
20,339
21,972
23,932
Under age 65
65 or older
32,512
36,595
41,495
34,962
38,555
43,455
17,889
21,972
20,339
23,932
California Adjusted Gross
Income
Dependents
0
1
2 of more
11,698 14,965
17,415
16,598 19,048
21,008
23,396
28,296
33,196
26,663
30,746
35,646
29,113
32,706
37,606
14,965
19,048
17,415
21,008
Filing requirements for children and other dependents California law is the same as federal law for the income of
children under age 14. For each child under age 14 who was a resident for any part of the year or who had
income from California sources and received more than $1,900 of investment income in 2009, there are two
options to figure the tax:
1. File Form 540 (540NR) for the child. Attach Form FTB 3800, Tax Computation for Children with
Investment Income, which must be used to figure the tax on the child's California income tax return, or
2. Include the child's interest and dividend income on the parent's return. Use Form FTB 3803, Parents
Election to Report Child's Interest and Dividends, if the child's interest and dividend income was $9,500
or less (but not less than $950). Form 3803 is comparable to federal Form 8814.
Note: The child's interest and income cannot be included on the parent's return if the amount is more than
$9,500.
Other situations when an individual must file
An individual must file a return if he/she owes any of the following taxes.
•
Tax on a lump-sum distribution.
•
Tax on a qualified retirement plan, including an individual retirement arrangement (IRA) or on a medical
saving account (MSA).
•
Tax for children under age 14 who have investment income greater than $1,900 (see above).
•
Alternative minimum tax.
•
Recapture taxes.
•
Deferred tax on certain installment obligations.
•
Tax on accumulation distribution of a trust.
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