California California 540 Form Instruction Booklet
Extracted from PDF file 2016-california-form-540-540a-instructions.pdf, last modified November 2016
California 540 Form Instruction Booklet2016 Instructions for Form 540 — California Resident Income Tax Return References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2015, and the C alifornia Revenue and Taxation Code (R&TC). Before You Begin Complete your federal income tax return (Form 1040, Form 1040A, or Form 1040EZ) before you begin your California Form 540. Use information from your federal income tax return to complete your Form 540. Complete and mail Form 540 by April 18, 2017. Due to the federal Emancipation Day holiday observed on April 17, 2017, tax returns filed and payments mailed or submitted on April 18, 2017, will be considered timely. If unable to mail your tax return by this date, see page 2. ✓Tip You may qualify for the federal earned income credit. See page 2 for more information. Note: The lines on Form 540 are numbered with gaps in the line number sequence. For example, lines 20 through 30 do not appear on Form 540, so the line number that follows line 19 on Form 540 is line 31. Caution: Form 540 has five sides. When filing Form 540, you must send all five sides to the Franchise Tax Board (FTB). Filling in Your Tax Return yy Use black or blue ink on the tax return you send to the FTB. yy Enter your social security number(s) or individual taxpayer identification number(s) at the top of Form 540, Side 1. yy Print numbers and CAPITAL LETTERS between the combed lines. Be sure to line up dollar amounts. yy If you do not have an entry for a line, leave it blank unless the instructions for a line specifically tell you to enter -0-. Do not enter a dash, or the word “NONE.” Name(s) and Address Print your first name, middle initial, last name, and street address in the spaces provided at the top of the form. Suffix Use the Suffix field for generational name suffixes such as “SR”, “JR”, “III”, “IV”. Do not enter academic, professional, or honorary suffixes. Additional Information Use the Additional Information field for “In-Care-Of” name and other supplemental address information only. Foreign Address If you have a foreign address, follow the country’s practice for entering the city, county, province, state, country, and postal code, as applicable, in the appropriate boxes. Do not abbreviate the country name. Principal Business Activity (PBA) Code For federal Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) business filers, enter the numeric PBA code from federal Schedule C (Form 1040), line B. Date of Birth (DOB) Enter your DOBs (mm/dd/yyyy) in the spaces provided. If your filing status is married/RDP filing jointly or married/RDP filing separately, enter the DOBs in the same order as the names. Prior Name If you or your spouse/RDP filed your 2015 tax return under a different last name, write the last name only from the 2015 tax return. Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) Enter your SSN in the spaces provided. If filing a joint tax return, enter the SSNs in the same order as the names. If you do not have an SSN because you are a nonresident or resident alien for federal tax purposes, and the Internal Revenue Service (IRS) issued you an ITIN, enter the ITIN in the space for the SSN. An ITIN is a tax processing number issued by the IRS to foreign nationals and others who have a federal tax filing requirement and do not qualify for an SSN. It is a nine‑digit number that always starts with the number 9. Filing Status Line 1 through Line 5 – Filing Status Check only one box for line 1 through line 5. Enter the required additional information if you checked the box on line 3 or line 5. For filing status requirements, see page 3. Use the same filing status for California that you used for your federal income tax return. Exception: If you file a joint tax return for federal, you may file separately for California if either spouse was: yy An active member of the United States armed forces or any auxiliary military branch during 2016. yy A nonresident for the entire year and had no income from California sources during 2016. Caution – Community Property States: If the spouse earning the California source income is domiciled in a community property state, community income will be split equally between the spouses. Both spouses will have California source income and they will not qualify for thenonresident spouse exception. If you had no federal filing requirement, use the same filing status for California you would have used to file a federal income tax return. Registered domestic partners (RDPs) who file single for federal must file married/RDP filing jointly or married/RDP filing separately for California. If you are an RDP and file head of household for federal purposes, you may file head of household for California purposes only if you meet the requirements to be considered unmarried or considered not in a domestic partnership. If you filed a joint tax return and either you or your spouse/RDP was a nonresident for 2016, you must file the Long or Short Form 540NR, California Nonresident or Part-Year Resident Income Tax Return. Exemptions Line 6 – Can be Claimed as Dependent 601 Check the box on line 6 if someone else can claim you or your spouse/RDP as a dependent on their tax return, even if they chose not to. Line 7 – Personal Exemptions Did you check the box on line 6? No Follow the instructions on line 7. Yes Ignore the instructions on line 7. Instead, enter in the box on line 7 the amount shown below for your filing status: yy Single or married/RDP filing separately, enter -0-. yy Head of household, enter -0-. yy Married/RDP filing jointly and both you and your spouse/RDP can be claimed as dependents, enter -0-. yy Married/RDP filing jointly and only one spouse/RDP can be claimed as a dependent, enter 1. Do not claim this credit if someone else can claim you as a dependent on their tax return. Personal Income Tax Booklet 2016 Page 9 Instructions: Form 540 Line 8 – Blind Exemptions The first year you claim this exemption credit, attach a doctor’s statement to the back of Form 540 indicating you or your spouse/RDP are visually impaired. If you e-file, attach any requested forms, schedules and documents according to your software’s instructions. Visually impaired means not capable of seeing better than 20/200 while wearing glasses or contact lenses, or if your field of vision is not more than 20 degrees. Do not claim this credit if someone else can claim you as a dependent on their tax return. Line 9 – Senior Exemptions If you were 65 years of age or older by December 31, 2016,* you should claim an additional exemption credit on line 9. If you are married/or an RDP, each spouse/RDP 65 years of age or older should claim an additional credit. You may contribute all or part of this credit to the California Seniors Special Fund. See “Voluntary Contribution Fund Descriptions” for more information. *If your 65th birthday is on January 1, 2017, you are considered to be age 65 on December 31, 2016. Do not claim this credit if someone else can claim you as a dependent on their tax return. Line 10 – Dependent Exemptions To claim an exemption credit for each of your dependents, you must write each dependent’s first and last name, SSN and relationship to you in the space provided. If you are claiming more than three dependents, attach a statement with the required dependent information to your tax return. Count the number of dependents listed and enter the total in the box on line 10. Multiply the number you entered by the pre‑printed dollar amount and enter the result. If your dependent child was born and died in 2016 and you do not have an SSN for the child, enter “Died” in the space provided for the SSN and include a copy of the child’s birth certificate, death certificate, or hospital records. The document must show the child was born alive. If you e-file, attach any requested forms, schedules and documents according to your software’s instructions. Line 11 – Exemption Amount e-file at ftb.ca.gov yy yy yy yy yy yy yy Investment interest Qualified residence interest acquisition loan & equity loan Expense depreciation property limits Individual Retirement Account Interest education loan Rental real estate passive loss Rollover of publicly traded securities gain into specialized small business investment companies RDPs filing as married/RDP filing separately, former RDPs filing separately, and RDPs with RDP adjustments will use the California RDP Adjustments Worksheet in FTB Pub. 737, Tax Information for Registered Domestic Partners, or complete a federal pro forma Form 1040. Transfer the amount from the California RDP Adjustments Worksheet, line 37, column D, or federal pro forma Form 1040, line 37, to Form 540, line 13. Line 14 – California Adjustments – Subtractions [from Schedule CA (540), line 37, column B] If there are no differences between your federal and California income or deductions, do not file a Schedule CA (540), California Adjustments — Residents. If there are differences between your federal and California income or deductions, complete Schedule CA (540). Follow the instructions for Schedule CA (540). Enter on line 14 the amount from Schedule CA (540), line 37, column B. If a negative amount, see Schedule CA (540), line 37 instructions. Line 15 – Subtotal Subtract the amount on line 14 from the amount on line 13. Enter the result on line 15. If the amount on line 13 is less than zero, combine the amounts on line 13 and line 14 and enter the result in parentheses. For example: “(12,325).” Line 16 – California Adjustments – Additions [from Schedule CA (540), line 37, column C] If there are differences between your federal and California income or deductions, complete Schedule CA (540). Follow the instructions for Schedule CA (540). Enter on line 16 the amount from Schedule CA (540), line 37, column C. If a negative amount, see Schedule CA (540), line 37 instructions. Add line 7 through line 10 and enter the total dollar amount of all exemptions for personal, blind, senior, and dependent. Line 18 – California Itemized Deductions or California Standard Deduction Taxable Income Decide whether to itemize your charitable contributions, medical expenses, mortgage interest paid, taxes, etc., or take the standard deduction. Your C alifornia income tax will be less if you take the larger of: yy Your C alifornia itemized deductions. yy Your C alifornia standard deduction. California itemized deductions may be limited based on federal AGI. To compute limitations, use Schedule CA (540). RDPs use your recalculated federal AGI to figure your itemized deductions. On federal tax returns, individual taxpayers who claim the standard deduction are allowed an additional deduction for net disaster losses. For California, deductions for disaster losses are only allowed for those individual taxpayers who itemized their deductions. If married/or an RDP and filing separate tax returns, you and your spouse/RDP must either both itemize your deductions (even if the itemized deductions of one spouse/RDP are less than the standard deduction) or both take the standard deduction. If someone else can claim you as a dependent, you may claim the greater of the standard deduction or your itemized deductions. To figure your standard deduction, use the Form 540 – California Standard Deduction Worksheet for Dependents. Itemized deductions. Figure your California itemized deductions by completing Schedule CA (540), Part II, line 38 through line 44. Enter the result on Form 540, line 18. Refer to your completed federal income tax return to complete this section. Line 12 – State Wages 204 Enter the total amount of your state wages from all states from each of your Form(s) W-2, Wage and Tax Statement. This amount appears on Form W-2, box 16. If you received wages and do not have a Form W-2, see “Attachments to your tax return.” Line 13 – Federal Adjusted Gross Income (AGI) from Form 1040, line 37; 1040A, line 21; or 1040EZ, line 4 RDPs who file a California tax return as married/RDP filing jointly and have no RDP adjustments between federal and California, combine their individual AGIs from their federal tax returns filed with the IRS. Enter the combined AGI on line 13. RDP adjustments include but are not limited to the following: yy Transfer of property between spouses/RDPs yy Capital loss yy Transactions between spouses/RDPs yy Sale of residence yy Dependent care assistance Page 10 Personal Income Tax Booklet 2016 e-file is fast, easy, and secure! Instructions: Form 540 If you did not itemize deductions on your federal income tax return but will itemize deductions for your Form 540, first complete federal Schedule A (Form 1040), Itemized Deductions. Then complete Schedule CA (540), Part II, line 38 through line 44. Attach both the federal Schedule A (Form 1040) and California Schedule CA (540) to the back of your tax return. Standard deduction. Find your standard deduction on the C alifornia Standard Deduction Chart for Most People. If you checked the box on Form 540, line 6, use the California Standard Deduction Worksheet for Dependents. California Standard Deduction Chart for Most People Do not use this chart if your parent, or someone else, can claim you (or your spouse/RDP) as a dependent on their tax return. Your Filing Status Enter On Line 18 1 – Single . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,129 2 – Married/RDP filing jointly . . . . . . . . . . . . . . . . . . . . . . . . . . $8,258 3 – Married/RDP filing separately . . . . . . . . . . . . . . . . . . . . . . . $4,129 4 – Head of household . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,258 5 – Qualifying widow(er) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,258 The California standard deduction amounts are less than the federal standard deduction amounts. California Standard Deduction Worksheet for Dependents Use this worksheet only if your parent, or someone else, can claim you (or your spouse/RDP) as a dependent on their return. Use whole dollars only. 1. Enter your earned income from: line 1 of the “Standard Deduction Worksheet for Dependents’’ in the instructions for federal Form 1040; Form 1040A; or from line A of the worksheet on the back of Form 1040EZ . . . . . . . . . . . . . . . . 1 2. Minimum standard deduction . . . . . . . . . . . . . . . 2 $1,050.00 3. Enter the larger of line 1 or line 2 here . . . . . . . . 3 4. Enter the amount shown for your filing status yy Single or married/RDP filing separately, enter $4,129 . . . . . . . . . . . . . . . . . . . . . . . . . yy Married/RDP filing jointly, head of household, or qualifying widow(er), 4 enter $8,258 . . . . . . . . . . . . . . . . . . . . . . . . 5. Standard deduction. Enter the smaller of line 3 or line 4 here and on Form 540, line 18 . . . 5 } Line 19 – Taxable Income Capital Construction Fund (CCF). If you claim a deduction on your federal Form 1040, line 43 for the contribution made to a capital construction fund set up under the Merchant Marine Act of 1936, reduce the amount you would otherwise enter on line 19 by the amount of the deduction. Next to line 19, enter “CCF” and the amount of the deduction. For details, see federal Publication 595, Capital Construction Fund for Commercial Fishermen. Tax When figuring your tax, use the correct filing status and taxable income amount. Line 31 – Tax To figure your tax, use one of the following methods and check the matching box on line 31: yy Tax Table. If your taxable income on line 19 is $100,000 or less, use the tax table beginning on page 75. Use the correct filing status column in the tax table. yy Tax Rate Schedules. If your taxable income on line 19 is over $100,000, use the tax rate schedule for your filing status on page 80. yy FTB 3800. Generally, use form FTB 3800, Tax Computation for Certain Children with Investment Income, to figure the tax on a separate Form 540 for your child who was 18 and under or a student under age 24 on January 1, 2017, and who had more than $2,100 of investment income. Attach form FTB 3800 to the child’s Form 540. yy FTB 3803. If, as a parent, you elect to report your child’s interest and dividend income of $10,500 or less (but not less than $1,050) on your tax return, complete form FTB 3803, Parents’ Election to Report Child’s Interest and Dividends. File a separate form FTB 3803 for each child whose income you elect to include on your Form 540. Add the amount of tax, if any, from each form FTB 3803, line 9, to the amount of your tax from the tax table or tax rate schedules and enter the result on Form 540, line 31. Attach form(s) FTB 3803 to your tax return. To prevent possible delays in processing your tax return or refund, enter the correct tax amount on this line. To automatically figure your tax or to verify your tax calculation, use our online tax calculator. Go to ftb.ca.gov and search for tax calculator. ✓Tip CalFile or e-file and you won’t have to do the math. Go to ftb.ca.gov and search for efile. Line 32 – Exemption Credits Exemption credits reduce your tax. If your federal adjusted gross income (AGI) on line 13 is more than the amount shown below for your filing status, your credits will be limited. For purposes of computing limitations based upon AGI, RDPs, recalculate their AGI using a federal pro forma or California RDP Adjustments Worksheet (located in FTB Pub. 737). If your recalculated federal AGI is more than the amount shown below for your filing status, your credits will be limited. If your filing status is: Is line 13 more than: Single or married/RDP filing separately . . . . . . . . . . . . . . . . . . . $182,459 Married/RDP filing jointly or qualifying widow(er) . . . . . . . . . . . $364,923 Head of household . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $273,692 Yes Complete the AGI Limitation Worksheet below. No Follow the instructions on Form 540, line 32. a b c d e f g h i j k l m n AGI Limitation Worksheet Use whole dollars only. Enter the amount from line 13 . . . . . . . . . . . . . . . . . . . . . a______ Enter the amount for your filing status on line b: • Single or married/RDP filing separately . . $182,459 • Married/RDP filing jointly or qualifying widow(er) . . . . . . . . . . . . . . . . . $364,923 b______ • Head of household . . . . . . . . . . . . . . . . . . $273,692 Subtract line b from line a . . . . . . . . . . . . . . . . . . . . . . . . c______ Divide line c by $2,500 ($1,250 if married/RDP filing separately). If the result is not a whole number, round it to the next higher whole number . . . . . . . . . . . . . . . . . . . d______ Multiply line d by $6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e______ Add the numbers from the boxes on lines 7, 8, and 9 (not the dollar amounts) . . . . . . . . . . . . . . f______ Multiply line e by line f . . . . . . . . . . . . . . . . . . . . . . . . . . . g______ Add the total dollar amount from lines 7, 8, and 9 . . . . . . h______ Subtract line g from line h. If zero or less, enter -0- . . . . . . i______ Enter the number from the box on line 10 (not the dollar amount) . . . . . . . . . . . . . . . . . . . . . . j______ Multiply line e by line j . . . . . . . . . . . . . . . . . . . . . . . . . . . k______ Enter the dollar amount from line 10 . . . . . . . . . . . . . . . . . l______ Subtract line k from line l. If zero or less, enter -0- . . . . . m______ Add line i and line m. Enter the result here and on line 32. n______ } Personal Income Tax Booklet 2016 Page 11 Instructions: Form 540 Line 34 – Tax from Schedule G-1 and Form FTB 5870A If you received a qualified lump-sum distribution in 2016 and you were born before January 2, 1936, get California Schedule G-1, Tax on Lump‑Sum Distributions to figure your tax by special methods that may result in less tax. If you received accumulation distributions from foreign trusts or from certain domestic trusts, get form FTB 5870A, Tax on Accumulation Distribution of Trusts, to figure the additional tax. To get these forms, see “Order Forms and Publications.” Special Credits and Nonrefundable Credits A variety of California tax credits are available to reduce your tax if you qualify. To figure and claim most special credits, you must complete a separate form or schedule and attach it to your Form 540. The Credit Chart on page 24 describes the credits and provides the name, credit code, and number of the required form or schedule. Many credits are limited to a certain percentage or a certain dollar amount. In addition, the total amount you may claim for all credits is limited by tentative minimum tax (TMT); go to Box A to see if your credits are limited. If you are not claiming any special credits go to line 40 and line 46 to see if you qualify for the nonrefundable child and dependent care expenses credit or the nonrefundable renter’s credit. Box A – Did you complete federal Schedule C, D, E, or F and claim or receive any of the following (Note: If your business gross receipts are less than $1,000,000 from all trades or businesses, you do not have to report alternative minimum tax (AMT). For more information, see line 61 instructions.): yy Accelerated depreciation in excess of straight-line yy Intangible drilling costs yy Depletion yy Circulation expenditures yy Research and experimental expenditures yy Mining exploration/development costs yy Amortization of pollution control facilities yy Income/loss from tax shelter farm activities yy Income/loss from passive activities yy Income from long-term contracts using the percentage of completion method yy Pass-through AMT adjustment from an estate or trust reported on Schedule K-1 (541) Yes Complete Schedule P (540). See “Order Forms and Publications.” No Go to Box B. Box B – Did you claim or receive any of the following: yy Investment interest expense & 226 yy Income from incentive stock options in excess of the amount reported on your tax return & 225 yy Income from installment sales of certain property Yes Complete Schedule P (540). See “Order Forms and Publications.” No Go to Box C. Box C – If your filing status is: Is Form 540, line 17 more than: Single or head of household . . . . . . . . . . . . . . . . . . . . $251,626 Married/RDP filing jointly or qualifying widow(er) . . . . $335,502 Married/RDP filing separately . . . . . . . . . . . . . . . . . . . $167,749 Yes Complete Schedule P (540). See “Order Forms and Publications.” No Your credits are not limited. Go to the instructions for line 40. Page 12 Personal Income Tax Booklet 2016 e-file at ftb.ca.gov Line 40 – Nonrefundable Child and Dependent Care Expenses Credit Claim this credit if you paid someone to care for your qualifying child under the age of 13, other dependent who is physically or mentally incapable of caring for him or herself, or spouse/RDP if physically or mentally incapable of caring for him or herself. The care must be provided in California. To claim this credit, your federal AGI must be $100,000 or less and you must complete and attach form FTB 3506, Child and Dependent Care Expenses Credit, included in this booklet. Line 43 through Line 45 – Additional Special Credits A code identifies each credit. To claim only one or two credits, enter the credit name, code, and amount of the credit on line 43 and line 44. To claim more than two credits, use Schedule P (540), Part III. See Schedule P (540) instructions, “How to Claim Your Credits.” Important: Attach Schedule P (540) and any supporting schedules or statements to your Form 540. Carryovers: If you claim a credit with carryover provisions and the amount of the credit available this year exceeds your tax, carry over any excess credit to future years until the credit is used (unless the carryover period is a fixed number of years). If you claim a credit carryover for an expired credit, use form FTB 3540, Credit Carryover and Recapture Summary, to figure the amount of the credit. Otherwise, enter the amount of the credit on Schedule P (540), Part III, and do not attach form FTB 3540. Credit for Joint Custody Head of Household — Code 170 You may not claim this credit if you used the married/RDP filing jointly, head of household, or qualifying widow(er) filing status. Claim the credit if unmarried and not an RDP at the end of 2016 (or if married/or an RDP, you lived apart from your spouse/RDP for all of 2016 and you used the married/RDP filing separately filing status); and if you furnished more than one-half the household expenses for your home that also served as the main home of your child, step-child, or grandchild for at least 146 days but not more than 219 days of the taxable year. If the child is married/or an RDP, you must be entitled to claim a dependent exemption credit for the child. Also, the custody arrangement for the child must be part of a decree of dissolution or legal separation or part of a written agreement between the parents where the proceedings have been initiated, but a decree of dissolution or legal separation has not yet been issued. Use the worksheet below to figure the Joint Custody Head of Household credit using whole dollars only. 1. Enter the amount from Form 540, line 35 . . . . . . . . . 1 2. Credit percentage — 30% . . . . . . . . . . . . . . . . . . . . 2 x .30 3. Credit amount. Multiply line 1 by line 2. Enter the result or $440, whichever is less . . . . . . . . 3 If you qualify for the Credit for Joint Custody Head of Household and the Credit for Dependent Parent, claim only one credit. Select the credit that allows the maximum benefit. Credit for Dependent Parent — Code 173 You may not claim the Credit for Dependent Parent if you used the single, head of household, qualifying widow(er), or married/RDP filing jointly filing status. Claim this credit only if all of the following apply: yy You were married/or an RDP at the end of 2016 and you used the married/RDP filing separately filing status. yy Your spouse/RDP was not a member of your household during the last six months of the year. yy You furnished over one-half the household expenses for your dependent mother’s or father’s home, whether or not she or he lived in your home. e-file is fast, easy, and secure! To figure the amount of this credit, use the worksheet for the Credit for Joint Custody Head of Household. If you qualify for the Credit for Joint Custody Head of Household and the Credit for Dependent Parent, claim only one. Select the credit that will allow the maximum benefit. Credit for Senior Head of Household — Code 163 You may claim this credit if you: yy Were 65 years of age or older on December 31, 2016.* yy Qualified as a head of household in 2014 or 2015 by providing a household for a qualifying individual who died during 2014 or 2015. yy Did not have AGI over $71,370 for 2016. * If your 65th birthday is on January 1, 2017, you are considered to be age 65 on December 31, 2016. If you meet all the conditions listed above, you do not need to qualify to use the head of household filing status for 2016 in order to claim this credit. Use this worksheet to figure this credit using whole dollars only. 1. Enter the amount from line 19 . . . . . . . . . . . . . . . . . 1 2. Credit percentage — 2% . . . . . . . . . . . . . . . . . . . . . 2 x .02 3. Credit amount. Multiply line 1 by line 2. Enter the result or $1,345, whichever is less . . . . . . 3 Credit for Child Adoption Costs — Code 197 For the year in which an adoption decree or an order of adoption is entered (e.g., adoption is final), claim a credit for 50% of the cost of adopting a child who was both: yy A citizen or legal resident of the United States. yy In the custody of a California public agency or a California political subdivision. Treat a prior unsuccessful attempt to adopt a child (even when the costs were incurred in a prior year) and a later successful adoption of a different child as one effort when computing the cost of adopting the child. Include the following costs if directly related to the adoption process: yy Fees for Department of Social Services or a licensed adoption agency. yy Medical expenses not reimbursed by insurance. yy Travel expenses for the adoptive family. Note: yy This credit does not apply when a child is adopted from another country or another state, or was not in the custody of a California public agency or a California political subdivision. yy Any deduction for the expenses used to claim this credit must be reduced by the amount of the child adoption costs credit claimed. Use the worksheet below to figure this credit using whole dollars only. If more than one adoption qualifies for this credit, complete a separate worksheet for each adoption. The maximum credit is limited to $2,500 per minor child. 1. Enter qualifying costs for the child . . . . . . . . . . . . . . 1 2. Credit percentage — 50% . . . . . . . . . . . . . . . . . . . . 2 x .50 3. Credit amount. Multiply line 1 by line 2. Do not enter more than $2,500 . . . . . . . . . . . . . . . . . 3 Your allowable credit is limited to $2,500 for 2016. Carry over the excess credit to future years until the credit is used. Line 46 – Nonrefundable Renter’s Credit If you paid rent for at least six months in 2016 on your principal residence located in California you may qualify to claim the nonrefundable renter’s credit which may reduce your tax. Complete the qualification record on page 21. Instructions: Form 540 Line 48 Subtract the amount on line 47 from the amount on line 35. Enter the result on line 48. If the amount on line 47 is more than the amount on line 35, enter -0-. Other Taxes Attach the specific form or statement required for each item below. Line 61 – Alternative Minimum Tax (AMT) If you claim certain types of deductions, exclusions, and credits, you may owe AMT if your total income is more than: yy $89,467 married/RDP filing jointly or qualifying widow(er) yy $67,101 single or head of household yy $44,732 married/RDP filing separately A child under age 19 or a student under age 24 may owe AMT if the sum of the amount on line 19 (taxable income) and any preference items listed on Schedule P (540) and included on the return is more than the sum of $7,400 and the child’s earned income. AMT income does not include income, adjustments, and items of tax preference related to any trade or business of a qualified taxpayer who has gross receipts, less returns and allowances, during the taxable year of less than $1,000,000 from all trades or businesses. Get Schedule P (540) for more information. See “Order Forms and Publications.” Line 62 – Mental Health Services Tax If your taxable income is more than $1,000,000, compute the Mental Health Services Tax using whole dollars only: 1. Taxable income from line 19 . . . . . . . . . . . . . . . . 1 2. Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 $(1,000,000) 3. Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4. Tax rate – 1% . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 x .01 5. Mental Health Services Tax – Multiply line 3 by line 4. Enter this amount here and on line 62 . . . 5 Line 63 – Other Taxes and Credit Recapture If you received an early distribution of a qualified retirement plan and were required to report additional tax on your federal tax return, you may also be required to report additional tax on your California tax return. Get form FTB 3805P, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts. If required to report additional tax, report it on line 63 and write “FTB 3805P” to the left of the amount. California conforms to federal law for income received under IRC Section 409A on a nonqualified deferred compensation (NQDC) plan and discounted stock options and stock appreciation rights. Income received under IRC Section 409A is subject to an additional 5% tax of the amount required to be included in income plus interest. Include the additional tax, if any, on line 63. Write “NQDC” on the dotted line to the left of the amount. If you owe interest on deferred tax from installment obligations, include the additional tax, if any, in the amount you enter on line 63. Write “IRC Section 453A interest” and the amount on the dotted line to the left of the amount on line 63. If you used form(s): yy FTB 3540, Credit Carryover and Recapture Summary yy FTB 3554, New Employment Credit yy FTB 3805Z, Enterprise Zone Deduction and Credit Summary yy FTB 3807, Local Agency Military Base Recovery Area Deduction and Credit Summary yy FTB 3808, Manufacturing Enhancement Area Credit Summary yy FTB 3809, Targeted Tax Area Deduction and Credit Summary Include the additional tax for credit recapture, if any, on line 63. Write the form number and the amount on the dotted line to the left of the amount on line 63. Personal Income Tax Booklet 2016 Page 13 Instructions: Form 540 Payments To avoid a delay in the processing of your tax return, enter the correct amounts on line 71 through line 74. Line 71 – California Income Tax Withheld Enter the total California income tax withheld from your: yy Form(s) W-2, Wage and Tax Statement, box 17 yy Form(s) W-2G, Certain Gambling Winnings, box 15 yy Form(s) 1099-DIV, Dividends and Distributions, box 14 yy Form(s) 1099-INT, Interest Income, box 17 yy Form(s) 1099-MISC, Miscellaneous Income, box 16 yy Form(s) 1099-OID, Original Issue Discount, box 14 yy Form(s) 1099-R, Distributions from Pensions, Annuities, Retirement, or Profit Sharing Plans, IRAs, Insurance Contracts, etc., box 12 Do not include city, local, or county tax withheld, tax withheld by other states, or nonconsenting nonresident (NCNR) member’s tax from Schedule K-1 (568), line 15e. Do not include withholding from Forms 592-B, Resident and Nonresident Withholding Tax Statement, or Form 593, Real Estate Withholding Tax Statement, on this line. For more details, see instructions for line 73. Generally, tax should not be withheld on federal Form 1099-MISC. If you want to pre-pay tax on income reported on federal Form 1099-MISC, use Form 540‑ES, Estimated Tax for Individuals. Line 72 – 2016 CA Estimated Tax and Other Payments Enter the total of any: yy California estimated tax payments you made using 2016 Form 540‑ES, electronic funds withdrawal, Web Pay, or credit card. yy Overpayment from your 2015 California income tax return that you applied to your 2016 estimated tax. yy Payment you sent with form FTB 3519, Payment for Automatic Extension for Individuals. yy California estimated tax payments made on your behalf by an estate, trust, or S corporation on Schedule K-1 (541) or Schedule K-1 (100S). ✓Tip To view payments made or get your current account balance, go to ftb.ca.gov and search for myftb account. If you and your spouse/RDP paid joint estimated taxes but are now filing separate income tax returns, either of you may claim the entire amount paid, or each may claim part of the joint estimated tax payments. If you want the estimated tax payments to be divided, notify the FTB before you file the tax returns so the payments can be applied to the proper account. The FTB will accept in writing, any divorce agreement (or court-ordered settlement) or a statement showing the allocation of the payments along with a notarized signature of both taxpayers. Send statements to: JOINT ESTIMATED CREDIT ALLOCATION MS F225 TAXPAYER SERVICES CENTER FRANCHISE TAX BOARD PO BOX 942840 SACRAMENTO, CA 94240-0040 If you or your spouse/RDP made separate estimated tax payments, but are now filing a joint income tax return, add the amounts you each paid. Attach a statement to the front of Form 540 explaining that payments were made under both SSNs. If you e-file, attach any requested forms, schedules and according to your software’s instructions You do not have to make estimated tax payments if you are a nonresident or new resident of California in 2017 and did not have a California tax liability in 2016. Page 14 Personal Income Tax Booklet 2016 e-file at ftb.ca.gov Line 73 – Withholding (Form 592-B and/or 593) Enter the total of California withholding from Form 592-B and Form 593. Attach a copy of Form(s) 593 and 592-B to the lower front of Form 540, Side 1. If your filing status changed after escrow closed and before filing your California tax return, please contact us at 888.792.4900, prior to filing your California tax return, for instructions on how to claim your withholding credit. Caution: Do not include withholding from federal Form(s) W-2, W-2G, or 1099, or NCNR member’s tax from Schedule K-1 (568), line 15e on this line. Line 74 – Excess C alifornia SDI (or VPDI) Withheld You may claim a credit for excess State Disability Insurance (SDI) or Voluntary Plan Disability Insurance (VPDI) if you meet all of the following conditions: yy You had two or more California employers during 2016. yy You received more than $106,742 in gross wages from California sources. yy The amounts of SDI (or VPDI) withheld appear on your Form(s) W-2. Be sure to attach your Form(s) W‑2 to the lower front of your Form 540. If SDI (or VPDI) was withheld from your wages by a single employer, at more than 0.9% of your gross wages, you may not claim excess SDI (or VPDI) on your Form 540. Contact the employer for a refund. To determine the amount to enter on line 74, complete the Excess SDI (or VPDI) Worksheet below. If married/RDP filing jointly, figure the amount of excess SDI (or VPDI) separately for each spouse/RDP. Excess SDI (or VPDI) Worksheet Use whole dollars only. Follow the instructions below to figure the amount of excess SDI to enter on Form 540, line 74. If you are married/RDP and file a joint return, you must figure the amount of excess SDI (or VPDI) separately for each spouse/RDP. Your You Spouse/ RDP 1. Add amounts of SDI (or VPDI) withheld shown on your Forms W-2. Enter the total here . . . . . . . . . . . . . . . . . . 1 $960.68 $960.68 2. 2016 SDI (or VPDI) limit . . . . . . . . . . . . . 2 3. Excess SDI (or VPDI) withheld. Subtract line 2 from line 1. Enter the results here. Combine the amounts on line 3 and enter the total, in whole dollars only on line 74 . . . . . . . . . . . . . . . . . . . . . . . . . 3 If zero or less, enter -0- on line 74. Line 75 – Earned Income Tax Credit (EITC) Enter your Earned Income Tax Credit from form FTB 3514, California Earned Income Tax Credit. Line 76 For the Claim of Right credit, follow the reporting instructions in Schedule CA (540), line 41 under the Claim of Right. Claim of Right: If you are claiming the tax credit on your California tax return, include the amount of the credit in the total for this line. Write in “IRC 1341” and the amount of the credit to the left of the amount column. e-file is fast, easy, and secure! To determine if you are entitled to this credit, refer to your prior year California Form 540, Form 540NR (Long or Short), or Schedule CA (540 or 540NR) to verify the amount was included in your CA taxable income. If the amount repaid under a “Claim of Right” was not originally taxed by California, you are not entitled to claim the credit. Use Tax Line 91 – Use Tax. You may owe use tax if you make purchases from out-of-state retailers (for example, purchases made by telephone, online, by mail, or in person) where sales or use tax was not paid and you use those items in California. If you have questions about whether a purchase is taxable, go to the Board of Equalization’s website at boe.ca.gov, or call its Customer Service Center at 1.800.400.7115 or (TTY) 711 (for hearing and speech disabilities). Some taxpayers are required to report business purchases subject to use tax directly to the Board of Equalization. However, they may report certain personal purchases subject to use tax on the FTB income tax return. You may not report business purchases subject to use tax on your income tax return if you: yy Have or are required to hold a California seller’s permit. yy Receive $100,000 or more per year in gross receipts from business operations. yy Are otherwise registered or required to be registered with the Board of Equalization to report use tax. Note: You may not report use tax on your income tax return for certain types of transactions. These types of transactions are described in detail below in the instructions. The Use Tax Worksheet and Estimated Use Tax Lookup Table will help you determine how much use tax to report. If you owe use tax but you do not report it on your income tax return, you must report and pay the tax to the Board of Equalization. For information on how to report use tax directly to the Board of Equalization, go to their website at boe.ca.gov and click on Find Information About Use Tax under the heading How Do I. Failure to report and pay timely may result in the assessment of interest, penalties, and fees. See page 22 for a general explanation of California use tax. Use Tax Worksheet You must use the Use Tax Worksheet to calculate your use tax liability, if any of these apply: yy You prefer to calculate the amount of use tax due based upon your actual purchases subject to use tax, rather than based on an estimate. yy You owe use tax on any item purchased for use in a trade or business and you are not registered or required to be registered with the Board of Equalization to report sales or use tax. yy You owe use tax on purchases of individual items with a purchase price of $1,000 or more each. Example 1: You purchased a television for $2,000 from an out-of-state retailer that did not collect tax. You must use the Use Tax Worksheet to calculate the tax due on the price of the television, since the price of the television is $1,000 or more. Example 2: You purchased a computer monitor for $300, a rare coin for $500, and designer clothing for $250 from out-of-state retailers that did not collect tax. Although the total price of all the items is $1,050, the price of each item is less than $1,000. Since none of these individual items are $1,000 or more, you are not required to use the Use Tax Worksheet and may choose to use the Estimated Use Tax Lookup Table. Instructions: Form 540 If you have a combination of individual non-business items purchased for $1,000 or more each, and/or items purchased for use in a trade or business in addition to individual, non-business items purchased for less than $1,000, you may either: yy Use the Use Tax Worksheet to compute use tax due on all purchases, or yy Use the Use Tax Worksheet to compute use tax due on all individual items purchased for $1,000 or more plus all items purchased for use in a trade or business. Use the Estimated Use Tax Lookup Table to estimate the use tax due on individual, non-business items purchased for less than $1,000, then add the amounts and report the total use tax on Line 91. Example 3: The total price of the items you purchased from out-of-state retailers that did not collect use tax is $2,300, which includes a $1,000 television, a $900 painting, and a $400 table for your living room. yy You may choose to calculate the use tax due on the total price of $2,300 using the Use Tax Worksheet, or yy You may choose to calculate the use tax due on the $1,000 price of the television using the Use Tax Worksheet and estimate your use tax liability for the painting and table by using the Estimated Use Tax Lookup Table, then add the amounts and report the total use tax on 91. Use Tax Worksheet (See Instructions Below) Use whole dollars only 1. Enter purchases from out-of-state sellers made without payment of California sales/use tax. If you choose to estimate the use tax due on individual, non-business items purchased for less than $1,000 each, only enter purchases of items with a purchase price of $1,000 or more plus items purchased for use in a trade or business not registered with the Board of Equalization . . . . . . . . . $ ________.00 2. Enter the applicable sales and use tax rate. . . . . . . . ___________ 3. Multiply Line 1 by the tax rate on Line 2. Enter result here . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ________.00 4. If you choose to estimate the use tax due on individual, non-business items purchased for less than $1,000 each, enter the use tax amount due from the Estimated Use Tax Lookup Table. If all of your purchases are included in Line 1, enter -0-. . . . . . . . $ ________.00 5. Add Lines 3 and 4. This is your total use tax . . . . . . $ ________.00 6. Enter any sales or use tax you paid to another state for purchases included on Line 1. See worksheet instructions below . . . . . . . . . . . . . . . $________.00 7. Subtract Line 6 from Line 5. This is the total use tax due. Enter the amount due on Line 91. If the amount is less than zero, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . $________.00 Worksheet, Line 1, Purchases Subject to Use Tax Report purchases of items that would have been subject to sales tax if purchased from a California retailer unless your receipt shows that California tax was paid directly to the retailer. For example, generally, you would include purchases of clothing, but not exempt purchases of food products or prescription medicine. For more information on nontaxable and exempt purchases, you may visit the Board of Equalization’s website at boe.ca.gov. yy Include handling charges. yy Do not include any other state’s sales or use tax paid on the purchases. yy Enter only purchases made during the year that corresponds with the tax return you are filing. Personal Income Tax Booklet 2016 Page 15 Instructions: Form 540 yy If you traveled to a foreign country and hand-carried items back to California, generally use tax is due on the purchase price of the goods you listed on your U.S. Customs Declaration less an $800 perperson exemption. For the hand carried items, you should report the amount of purchases in excess of the $800 per-person exemption. This $800 exemption does not apply to goods sent or shipped to California by mail or other common carrier. For goods sent or shipped, you should report the entire amount of the purchases. yy If your filing status is “married/RDP filing separately,” you may elect to report one-half of the use tax due or the entire amount on your income tax return. If you elect to report one-half, your spouse/RDP may report the remaining half on his or her income tax return or on the individual use tax return available from the Board of Equalization. Note: You cannot report the following types of purchases on your income tax return. yy Vehicles, vessels, and trailers that must be registered with the Department of Motor Vehicles. yy Mobile homes or commercial coaches that must be registered annually as required by the Health and Safety Code. yy Vessels documented with the U.S. Coast Guard. yy Aircraft. yy Rental receipts from leasing machinery, equipment, vehicles, and other tangible personal property to your customers. yy Cigarettes and tobacco products when the purchaser is registered with the Board of Equalization as a cigarette and/or tobacco products consumer. Worksheet, Line 2, Sales and Use Tax Rate Enter the sales and use tax rate applicable to the place in California where the property was used, stored, consumed, or given away. To find your sales and use tax rate using your computer or mobile device, please go to the Board of Equalization’s website at boe.ca.gov. Look under the heading, Popular Topics, then click on City and County Sales and Use Tax Rates. You may also call their Customer Service Center at 800.400.7115 or (TTY) 711 (for hearing and speech disabilities). Worksheet, Line 6, Credit for Tax Paid to Another State This is a credit for tax paid to other states on purchases reported on Line 1. You can claim a credit up to the amount of tax that would have been due if the purchase had been made in California. For example, if you paid $8.00 sales tax to another state for a purchase, and would have paid $6.00 in California, you can claim a credit of only $6.00 for that purchase. Estimated Use Tax Lookup Table You may use the Estimated Use Tax Lookup Table to estimate and report the use tax due on individual non-business items you purchased for less than $1,000 each. This option is only available if you are permitted to report use tax on your income tax return and you are not required to use the Use Tax Worksheet to calculate the use tax owed on all your purchases. Simply include the use tax liability that corresponds to your California Adjusted Gross Income (found on Line 17) and enter it on Line 91. You will not be assessed additional use tax on the individual non‑business items you purchased for less than $1,000 each. You may not use the Estimated Use Tax Lookup Table to estimate and report the use tax due on purchases of items for use in your business or on purchases of individual non-business items you purchased for $1,000 or more each. See the instructions for the Use Tax Worksheet if you have a combination of purchases of individual non-business items for less than $1,000 each and purchases of individual non-business items for $1,000 or more. Page 16 Personal Income Tax Booklet 2016 e-file at ftb.ca.gov Adjusted Gross Income (AGI) Range Less Than $10,000 $10,000 to $19,999 $20,000 to $29,999 $30,000 to $39,999 $40,000 to $49,999 $50,000 to $59,999 $60,000 to $69,999 $70,000 to $79,999 $80,000 to $89,999 $90,000 to $99,999 $100,000 to $124,999 $125,000 to $149,999 $150,000 to $174,999 $175,000 to $199,999 Use Tax Liability $2 $6 $10 $14 $17 $21 $25 $29 $33 $37 $44 $53 $63 $73 More than $199,999 – Multiply AGI by 0.039% (x0.00039) Enter your use tax liability on Line 4 of the worksheet, or if you are not required to use the worksheet, enter the amount on Line 91 of your income tax return. Overpaid Tax or Tax Due To avoid delay in processing of your tax return, enter the correct amounts on line 94 through line 97. If you received a refund for 2015, you may receive a federal Form 1099‑G. The refund amount reported on your federal Form 1099-G will be different from the amount shown on your tax return if you claimed the refundable California Earned Income Tax Credit. This is because the credit is not part of the refund from withholding or estimated tax payments. Line 94 – Overpaid Tax If the amount on line 92 is more than the amount on line 64, your payments and credits are more than your tax. Subtract the amount on line 64 from the amount on line 92. Enter the result on line 94. Line 95 – Amount You Want Applied to Your 2017 Estimated Tax Apply all or part of the amount on line 94 to your estimated tax for 2017. Enter on line 95 the amount of line 94 that you want applied to your 2017 estimated tax. An election to apply an overpayment to estimated tax is binding. Once the election is made, the overpayment cannot be applied to a deficiency after the due date of the tax return. Line 96 – Overpaid Tax Available This Year If you entered an amount on line 95, subtract it from the amount on line 94. Enter the result on line 96. Choose to have this entire amount refunded to you or make voluntary contributions from this amount. See “Voluntary Contribution Fund Descriptions” for more information. Line 97 – Tax Due If the amount on line 92 is less than the amount on line 64, subtract the amount on line 92 from the amount on line 64. Enter the result on line 97. Your tax is more than your payments and credits. There is a penalty for not paying enough tax during the year. You may have to pay a penalty if: yy The tax due on line 97 is $500 or more ($250 or more if married/RDP filing separately). yy The amount of state income tax withheld on line 71 is less than 90% of the amount of your total tax on line 64. If this applies to you, see instructions on line 113. e-file is fast, easy, and secure! Increasing your withholding could eliminate the need to make a large payment with your tax return. To increase your withholding, complete EDD Form DE 4, Employee’s Withholding Allowance Certificate, and give it to your employer’s appropriate payroll staff. Get this form from your employer or by calling EDD at 888.745.3886. Download the DE 4 at edd.ca.gov or to use the online calculator, go to ftb.ca.gov and search for de 4. Form DE 4 specifically adjusts your California state withholding and is not the same as the federal Form W-4, Employee’s Withholding Allowance Certificate. Contributions You can make voluntary contributions to the funds listed on Side 4. See “Voluntary Contributions Fund Descriptions” for more information. You may also contribute any amount to the State Parks Protection Fund/Parks Pass Purchase. To receive a single annual park pass, your contribution must equal or exceed $195. When applicable, FTB will forward your name and address from your tax return to the Department of Parks and Recreation (DPR) who will issue a single Vehicle Day Use Annual Pass to you. Only one pass will be provided per tax return. You may contact DPR directly to purchase additional passes. If there is an error on your tax return in the computation of total contributions or if we disallow the contribution you requested because there is no credit available for the tax year, your name and address will not be forwarded to DPR. Any contribution less than $195 will be treated as a voluntary contribution and may be deducted as a charitable contribution. For more information go to parks.ca.gov/annualpass/ or email [email protected] Amount You Owe Add or subtract correctly to figure the amount you owe. Line 111 – Amount You Owe If you do not have an amount on line 96, add the amount on line 93, line 97, and line 110, if any. Enter the result on line 111. If you have an amount on line 96 and the amount on line 110 is more than line 96, subtract line 96 from line 110 and enter the difference on line 111. To avoid a late filing penalty, file your Form 540 by the extended due date even if you cannot pay the amount you owe. Mandatory Electronic Payments. You are required to remit all your payments electronically once you make an estimate or extension payment exceeding $20,000 or you file an original return with a total tax liability over $80,000. Once you meet this threshold, all subsequent payments regardless of amount, tax type, or taxable year must be remitted electronically. The first payment that would trigger the mandatory e-pay requirement does not have to be made electronically. Individuals that do not send the payment electronically will be subject to a 1% noncompliance penalty. You can request a waiver from mandatory e-pay if one or more of the following is true: yy You have not made an estimated tax or extension payment in excess of $20,000 during the current or previous taxable year. yy Your total tax liability reported for the previous taxable year did not exceed $80,000. yy The amount you paid is not representative of your total tax liability. Electronic payments can be made using Web Pay on FTB’s website, electronic funds withdrawal (EFW) as part of the e-file return, or your credit card. For more information or to obtain the waiver form, go to ftb.ca.gov and search for mandatory epay. Instructions: Form 540 Payment Options yy Electronic Funds Withdrawal – Instead of paying by check or money order, use this convenient option if you e-file. Simply provide your bank information, amount you want to pay, and the date you want the balance due to be withdrawn from your account. Your tax preparation software will offer this option. yy Web Pay – Pay the amount you owe using our secure online payment service. Go to ftb.ca.gov for more information. yy Credit Card – Use your Discover, MasterCard, Visa, or American Express card to pay your tax. If you pay by credit card, do not mail form FTB 3519 to us. Call 800.272.9829 or go to the Official Payments Corp. website at officialpayments.com, and use the jurisdiction code 1555. Official Payments Corp. charges a convenience fee for using this service. yy Check or Money Order – Using black or blue ink, make your check or money order payable to the “Franchise Tax Board.” Do not send cash or other items of value (such as stamps, lottery tickets, foreign currency, and gift cards). Write your SSN or ITIN and “2016 Form 540” as applicable on the check or money order. Enclose, but do not staple, your payment with your tax return. Make all checks or money orders payable in U.S. dollars and drawn against a U.S. financial institution. Do not combine your 2016 tax payment and any 2017 estimated tax payment in the same check. Prepare two separate checks and mail each in a separate envelope. If you e-filed your tax return, mail your check or money order with form FTB 3582, Payment Voucher for Individual e-filed Returns. Do not mail a copy of your e-filed tax return. A penalty may be imposed if your check is returned by your bank for insufficient funds. Paying by Credit Card – Whether you e-file or file by mail, use your Discover, MasterCard, Visa, or American Express card to pay your personal income taxes (tax return balance due, extension payment, estimated tax payment, or tax due with bill notice). There is a convenience fee for this service. This fee is paid directly to Official Payments Corp. based on the amount of your tax payment. Convenience Fee yy 2.30% of the tax amount charged (rounded to the nearest cent) yy Minimum fee: $1 Example: Tax Payment = $753.56 Convenience Fee = $17.33 When will my payments be effective? Your payment is effective on the date you charge it. What if I change my mind? If you pay your tax liability by credit card and later reverse the credit card transaction, you may be subject to penalties, interest, and other fees imposed by the FTB for nonpayment or late payment of your tax liability. How do I use my credit card to pay my income tax bill? Once you have determined the type of payment and how much you owe, have the following ready: yy Your Discover, MasterCard, Visa, or American Express card yy Credit card number yy Expiration date yy Amount you are paying yy Your and your spouse’s/RDP’s SSN or ITIN yy First 4 letters of your and your spouse’s/RDP’s last name yy Taxable year yy Home phone number (including area code) yy ZIP Code for address where your monthly credit card bill is sent yy FTB Jurisdiction Code: 1555 Personal Income Tax Booklet 2016 Page 17 Instructions: Form 540 Go to the Official Payments Corp. online payment center at officialpayments.com or call 800.2PAY.TAX or 800.272.9829 and follow the recorded instructions. Official Payments Corp. provides customer assistance at 877.297.7457 Monday through Friday, 5:00 a.m. to 5:00 p.m. PST. Payment Date: __________________ Confirmation Number: ___________________ If you cannot pay the full amount or can only make a partial payment for the amount shown on Form 540, line 114, see the information regarding Installment Payments. Interest and Penalties If you file your tax return or pay your tax after the due date, you may owe interest and penalties on the tax due. Do not reduce the amount on line 94 or increase the amount on line 97 by any penalty or interest amounts. Enter on Form 540, line 112 the amount of interest and penalties. Line 112 – Interest and Penalties Interest. Interest will be charged on any late filing or late payment penalty from the original due date of the return to the date paid. In addition, if other penalties are not paid within 15 days, interest will be charged from the date of the billing notice until the date of payment. Interest compounds daily and the interest rate is adjusted twice a year. The FTB website has a chart of interest rates in effect since 1976. Go to ftb.ca.gov and search for interest rates. Late Filing of Tax Return. If you do not file your tax return by October 16, 2017, you will incur a late filing penalty plus interest from the original due date of the tax return. The maximum total penalty is 25% of the tax not paid if the tax return is filed after October 16, 2017. The minimum penalty for filing a tax return more than 60 days late is $135 or 100% of the balance due, whichever is less. Late Payment of Tax. If you fail to pay your total tax liability by April 18, 2017, you will incur a late payment penalty plus interest. The penalty is 5% of the tax not paid when due plus 1/2% for each month, or part of a month, the tax remains unpaid. We may waive the late payment penalty based on reasonable cause. Reasonable cause is presumed when 90% of the tax shown on the return is paid by the original due date of the return. However, the imposition of interest is mandatory. If, after April 18, 2017, you find that your estimate of tax due was too low, pay the additional tax as soon as possible to avoid or minimize further accumulation of penalties and interest. Penalties. To avoid late payment penalties for use tax, you must report and pay the use tax with a timely filed income tax return, or California Individual Use Tax return. Other Penalties. We may impose other penalties if a payment is returned for insufficient funds. We may also impose penalties for negligence, substantial understatement of tax, and fraud. Line 113 – Underpayment of Estimated Tax You may be subject to an estimated tax penalty if any of the following is true: yy Your withholding and credits are less than 90% of your current tax year liability. yy Your withholding and credits are less than 100% of your prior year tax liability (110% if AGI is more than $150,000 or $75,000 if married/RDP filing separately). yy You did not pay enough through withholding to keep the amount you owe with your tax return under $500 ($250 if married/RDP filing separately). The FTB can figure the penalty for you when you file your tax return and send you a bill. Page 18 Personal Income Tax Booklet 2016 e-file at ftb.ca.gov Is line 97 less than $500 ($250 if married/RDP filing separately)? Yes Stop. You are not subject to an estimated payment penalty. No Continue. You may be subject to an estimated payment penalty. Is line 97 less than 10% of the amount on line 48? Form 540 filers: this excludes the tax on lump-sum distributions on Form 540, line 34. Yes Stop. You are not subject to an estimated payment penalty. No You may be subject to an estimated payment penalty; get form FTB 5805, Underpayment of Estimated Tax by Individuals and Fiduciaries (or form FTB 5805F, Underpayment of Estimated Tax by Farmers and Fishermen). The underpayment of estimated tax penalty shall not apply to the extent the underpayment of an installment was created or increased by any provision of law that is chaptered during and operative for the taxable year of the underpayment. To request a waiver of the underpayment of estimated tax penalty, get form FTB 5805 or form FTB 5805F. See “Where To Get Income Tax Forms and Publications.” If you complete one of these forms, attach it to the back of your Form 540. Enter the amount of the penalty on line 113 and check the correct box on line 113. Complete and attach the form if you claim a waiver, use the annualized income installment method, or pay tax according to the schedule for farmers and fishermen, even if you do not owe a penalty. See “Important Dates” for more information on estimated tax payments and how to avoid the underpayment penalty. See the instructions for Form 540, line 114 for information about figuring your payment, if any. Line 114 – Total Amount Due Is there an amount on line 111? Yes Add line 111, line 112, and line 113. Enter the result on line 114. For payment options, see line 111 instructions. No Go to line 115. Make all checks or money orders payable in U.S. dollars and drawn against a U.S. financial institution. Refund or No Amount Due Line 115 – Refund or No Amount Due Did you report amounts on line 110, line 112, or line 113? No Enter the amount from line 96 on line 115. This is your refund amount. If it is less than $1, attach a written statement to your Form 540 requesting the refund. Yes Combine the amounts from line 110, line 112, and line 113. If the result is: yy Less than line 96, subtract the sum of line 110, line 112, and line 113 from line 96 and enter on line 115. This is your refund amount. yy More than line 96, subtract line 96 from the sum of line 110, line 112, and line 113 and enter the result on line 114. This is your total amount due. For payment options, see line 111 instructions. e-file is fast, easy, and secure! Instructions: Form 540 Direct Deposit (Refund Only) Sign You
2016 540 Instructions California Resident Income Tax Return
More about the California Form 540-540A Instructions Individual Income Tax TY 2016
This document contains the official instructions for filling out your California Form 540/540A. Use this booklet to help you fill out and file Form 540 or 540A.
We last updated the California 540 Form Instruction Booklet in January 2017, so this is the latest version of Form 540-540A Instructions, fully updated for tax year 2016. You can download or print current or past-year PDFs of Form 540-540A Instructions directly from TaxFormFinder. You can print other California tax forms here.
Other California Individual Income Tax Forms:
|Form Code||Form Name|
|Form 540||California Resident Income Tax Return|
|Form 540-540A Instructions||California 540 Form Instruction Booklet|
|Form 540 Schedule CA||California Adjustments - Residents|
|Form 540-NR||California Nonresident or Part-Year Resident Income Tax Return|
|Form 3582||Payment Voucher for Individual e-filed Returns|
California usually releases forms for the current tax year between January and April. We last updated California Form 540-540A Instructions from the Franchise Tax Board in January 2017.
About the Individual Income Tax
The IRS and most states collect a personal income tax, which is paid throughout the year via tax withholding or estimated income tax payments.
Most taxpayers are required to file a yearly income tax return in April to both the Internal Revenue Service and their state's revenue department, which will result in either a tax refund of excess withheld income or a tax payment if the withholding does not cover the taxpayer's entire liability. Every taxpayer's situation is different - please consult a CPA or licensed tax preparer to ensure that you are filing the correct tax forms!
Historical Past-Year Versions of California Form 540-540A Instructions
We have a total of two past-year versions of Form 540-540A Instructions in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:
2016 540 Instructions California Resident Income Tax Return
2015 Instructions for Form 540 --California Resident Income Tax Return
While we do our best to keep our list of California Income Tax Forms up to date and complete, we cannot be held liable for errors or omissions. Is the form on this page out-of-date or not working? Please let us know and we will fix it ASAP.