California California 540 Form Instruction Booklet

California 540 Form Instruction Booklet
CALIFORNIA 540 Forms & Instructions 2022 Personal Income Tax Booklet
CALIFORNIA

540

Forms & Instructions

2022
Personal Income Tax Booklet
Members of the Franchise Tax Board
Betty T. Yee, Chair
Malia M. Cohen, Member
Joe Stephenshaw, Member

COVER GRAPHICS OMITTED FOR DOWNLOADING SPEED

Table of Contents
Important Dates .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  2
Do I Have to File? .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  3
What’s New and Other Important Information for 2022 .  .  .  .  .  .  .  .  .  .  .  .  4
Which Form Should I Use?  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  9
Instructions for Form 540  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   11
Nonrefundable Renter’s Credit Qualification Record  .  .  .  .  .  .  .  .  .  .  .  .  .  . 23
Voluntary Contribution Fund Descriptions .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 24
Credit Chart .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 25
Frequently Asked Questions .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 27
Additional Information .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 28
Instructions for Filing a 2022 Amended Return .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 30
Form 540, California Resident Income Tax Return  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 33
Schedule CA (540), California Adjustments — Residents .  .  .  .  .  .  .  .  .  . 39

Important Dates

Instructions for Schedule CA (540) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Schedule D (540), California Capital Gain or Loss Adjustment .  .  .  .  .  .
Instructions for Schedule D (540) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
FTB 3519, Payment for Automatic Extension for Individuals .  .  .  .  .  .  .  .
FTB 3532, Head of Household Filing Status Schedule  .  .  .  .  .  .  .  .  .  .  .
Instructions for Form FTB 3532  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
FTB 3514, California Earned Income Tax Credit .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Instructions for Form FTB 3514  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
2022 California Tax Table .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
2022 California Tax Rate Schedules .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
How To Get California Tax Information .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Franchise Tax Board Privacy Notice on Collection .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Automated Phone Service .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

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57
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87
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94
94
95

When the due date falls on a weekend or holiday, the deadline to file and pay without penalty is extended to the next business day. Due to the federal
Emancipation Day holiday observed on April 17, 2023, tax returns filed and payments mailed or submitted on April 18, 2023, will be considered timely.
April 18, 2023*

Last day to file and pay the 2022 amount you owe to avoid penalties and interest.* See form FTB 3519 for more information.
See “Interest and Penalties” section for information regarding a one-time timeliness penalty abatement.
*If you are living or traveling outside the United States on April 18, 2023, the dates for filing your tax return and paying
your tax are different. See form FTB 3519 for more information.

October 16, 2023

Last day to file or e-file your 2022 tax return to avoid a late filing penalty and interest computed from the original due date
of April 18, 2023.

April 18, 2023
June 15, 2023
September 15, 2023
January 16, 2024

The dates for 2023 estimated tax payments. Generally, you do not have to make estimated tax payments if the total of your
California withholdings is 90% of your required annual payment. Also, you do not have to make estimated tax payments if
you will pay enough through withholding to keep the amount you owe with your tax return under $500 ($250 if married/registered
domestic partner (RDP) filing separately). However, if you do not pay enough tax either through withholding or by making estimated
tax payments, you may have an underpayment of estimated tax penalty. Get Form 540-ES instructions for more information.

$$$ for You
•	 Federal Earned Income Credit (EIC) – Go to the Internal Revenue
Service (IRS) website at irs.gov/taxtopics and choose topic 601, get
the federal income tax booklet, or go to irs.gov and search for eitc
assistant.
•	 California Earned Income Tax Credit (EITC) – EITC reduces your
California tax obligation, or allows a refund if no California tax is due.
You may qualify if you have wage income earned in California and/or net
earnings from self‑employment of less than $30,001. You do not need
a child to qualify. For more information, go to ftb.ca.gov and search for
eitc or get form FTB 3514, California Earned Income Tax Credit.
•	 Young Child Tax Credit (YCTC) – YCTC reduces your California tax
obligation, or allows a refund if no California tax is due. You may
qualify for the credit if you qualified for the California EITC or you
would otherwise have been allowed the California EITC but that you
have earned income of zero dollars or less, and you have at least one
qualifying child who is younger than six years old as of the last day
of the taxable year. For more information, see the instructions for
Form 540, California Resident Income Tax Return, line 76, and get
form FTB 3514, or go to ftb.ca.gov and search for yctc.
•	 Foster Youth Tax Credit (FYTC) – FYTC reduces your California tax
obligation, or allows a refund if no California tax is due. You may
qualify for the credit if you qualified for the California EITC, age 18
to 25, were in foster care while 13 years of age or older and placed
through the California foster care system. For more information, see
the instructions for Form 540, line 77, and get form FTB 3514, or go
to ftb.ca.gov and search for fytc.
•	 Refund of Excess State Disability Insurance (SDI) – If you worked
for at least two employers during 2022 who together paid you more
than $145,600 in wages, you may qualify for a refund of excess SDI.
See instructions for Form 540, line 74.

Common Errors and How to Prevent Them

Help us process your tax return quickly and accurately. When we find an
error, it requires us to stop to verify the information on the tax return,
which slows processing. The most common errors consist of:
•	 Claiming the wrong amount of estimated tax payments.
•	 Claiming the wrong amount of standard deduction or itemized
deductions.
•	 Claiming a dependent already claimed on another return.
•	 The amount of refund or payments made on an original return does
not match our records when amending your tax return.

Page 2  Personal Income Tax Booklet  2022

•	 Claiming the wrong amount of withholding by incorrectly totaling or
transferring the amounts from your federal Form W-2, Wage and Tax
Statement.
•	 Claiming the wrong amount of real estate withholding.
•	 Claiming the wrong amount of SDI.
•	 Claiming the wrong amount of exemption credits.
Claiming estimated tax payments:
•	 Verify the amount of estimated tax payments claimed on your tax
return matches what you sent to the Franchise Tax Board (FTB) for
that year. Go to ftb.ca.gov and login or register for MyFTB to view
your total ­estimated tax payments before you file your tax return.
•	 Verify the overpayment amount from your 2021 tax return you
requested to be applied to your 2022 estimated tax.
Claiming state disability insurance:
•	 Verify the amount of SDI used to figure the amount of excess SDI
claimed on Form 540, line 74, matches amounts from your W-2’s.
Claiming standard deduction or itemized deductions:
•	 See Form 540, line 18 instructions and worksheets for the amount of
standard deduction or itemized deductions you can claim.
Claiming withholding amounts:
•	 Go to ftb.ca.gov and login or register for MyFTB to verify withheld
amount or see instructions for Form 540, line 71. Confirm only
California income tax withheld is claimed.
•	 Verify real estate or other withholding amount from Form 592-B,
Resident and Nonresident Withholding Tax Statement, and Form 593,
Real Estate Withholding Statement. See instructions for Form 540,
line 73.
Claiming refund or payments made on an original return when
amending your tax return:
•	 Go to ftb.ca.gov and login or register for MyFTB to check tax return
records for refund or payments made.
•	 Verify the amount from your original return Form 540, line 115 and
include any adjustment by the FTB.
Use e-file:
•	 By using e-file, you can eliminate many common errors. Go to
ftb.ca.gov and search for efile options.

Do I Have to File?
Steps to Determine Filing Requirement

Step 3: If your income is less than the amounts on the chart you may
still have a filing requirement. See “Requirements for Children with
Investment Income” and “Other Situations When You Must File.” Do
those instructions apply to you? If yes, you have a filing requirement. If
no, go to Step 4.
Step 4: Are you married/RDP filing separately with separate property
income? If no, you do not have a filing requirement. If yes, prepare a tax
return. If you owe tax, you have a filing requirement.

Step 1: Is your gross income (all income received from all sources in the
form of money, goods, property, and services that are not exempt from
tax) more than the amount shown in the California Gross Income chart
below for your filing status, age, and number of dependents? If yes, you
have a filing requirement. If no, go to Step 2.
Step 2: Is your adjusted gross income (federal adjusted gross
income from all sources reduced or increased by all California income
adjustments) more than the amount shown in the California Adjusted
Gross Income chart below for your filing status, age, and number of
dependents? If yes, you have a filing requirement. If no, go to Step 3.
On 12/31/22,
my filing status was:

California Gross Income
Dependents

and on 12/31/22,
my age was:

(If your 65th birthday is on
January 1, 2023, you are considered to
be age 65 on December 31, 2022)

0

1

2
or more

California Adjusted Gross Income
Dependents
2
0
1
or more

Single or
Head of household

Under 65
65 or older

20,913
27,913

35,346
38,738

46,171
47,398

16,730
23,730

31,163
34,555

41,988
43,215

Married/RDP filing jointly
Married/RDP filing separately

Under 65 (both spouses/RDPs)
65 or older (one spouse/RDP)
65 or older (both spouses/RDPs)

41,830
48,830
55,830

56,263
59,655
66,655

67,088
68,315
75,315

33,466
40,466
47,466

47,899
51,291
58,291

58,724
59,951
66,951

Qualifying surviving spouse/RDP

Under 65
65 or older
Any age

(The income of both spouses/RDPs must
be combined; both spouses/RDPs may be
required to file a tax return even if only one
spouse/RDP had income over the amounts
listed.)

Dependent of another person
– Any filing status

35,346
46,171
31,163
41,988
38,738
47,398
34,555
43,215
More than your standard deduction (Use the California Standard Deduction
Worksheet for Dependents on page 13 to figure your standard deduction.)

Requirements for Children with Investment Income
California law conforms to federal law which allows parents’ election to
report a child’s interest and dividend income from children under age 19
or a student under age 24 on the parent’s tax return. For each child
under age 19 or student under age 24 who ­received more than $2,300 of
investment income in 2022, complete Form 540 and form FTB 3800, Tax
Computation for Certain Children with Unearned Income, to figure the
tax on a separate Form 540 for your child.
If you qualify, you may elect to report your child’s income of more than
$1,150 but less than $11,500 on your tax return by completing form
FTB 3803, Parents’ Election to Report Child’s Interest and Dividends.
To make this election, your child’s income must be only from interest
and/or dividends. To get forms FTB 3800 or FTB 3803, see “Order Forms
and Publications” or go to ftb.ca.gov/forms.

Other Situations When You Must File
If you have a tax liability for 2022 or owe any of the following taxes for
2022, you must file Form 540.
•	 Tax on a lump-sum distribution.
•	 Tax on a qualified retirement plan including an Individual Retirement
Arrangement (IRA) or an Archer Medical Savings Account (MSA).
•	 Tax for children under age 19 or student under age 24 who have
investment income greater than $2,300 (see paragraph above).
•	 Alternative minimum tax.
•	 Recapture taxes.
•	 Deferred tax on certain installment obligations.
•	 Tax on an accumulation distribution from a trust.

Filing Status
Use the same filing status for California that you used for your
federal income tax return, unless you are an RDP. If you are an RDP
and file single for federal, you 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.
Exception: If you file a joint tax return for federal purposes, you may file
separately for California if either spouse was either of the following:
•	 An active member of the United States armed forces or any auxiliary
military branch during 2022.
•	 A nonresident for the entire year and had no income from California
sources during 2022.

	

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 the nonresident spouse exception.
If you had no federal filing requirement, use the same filing status for
California that you would have used to file a federal income tax return.
If you filed a joint tax return and either you or your spouse/RDP was
a nonresident for 2022, file Form 540NR, California Nonresident or
Part-Year Resident Income Tax Return.
Single
You are single if any of the following was true on December 31, 2022:
•	 You were not married or an RDP.
•	 You were divorced under a final decree of divorce, legally separated
under a final decree of legal separation, or terminated your registered
domestic partnership.
•	 You were widowed before January 1, 2022, and did not remarry or
enter into another registered domestic partnership in 2022.
Married/RDP Filing Jointly
You may file married/RDP filing jointly if any of the following is true:
•	 You were married or an RDP as of December 31, 2022, even if you
did not live with your spouse/RDP at the end of 2022.
•	 Your spouse/RDP died in 2022 and you did not remarry or enter into
another registered domestic partnership in 2022.
•	 Your spouse/RDP died in 2023 before you filed a 2022 tax return.
Married/RDP Filing Separately
•	 Community property rules apply to the division of income if you
use the married/RDP filing separately status. For more information,
get FTB Pub. 1031, Guidelines for Determining Resident Status,
FTB Pub. 737, Tax Information for Registered Domestic Partners, or
FTB Pub. 1032, Tax Information for Military Personnel. See “Order
Forms and Publications” or go to ftb.ca.gov/forms.
•	 You cannot claim a personal exemption credit for your spouse/RDP
even if your spouse/RDP had no income, is not filing a tax return,
and is not claimed as a dependent on another person’s tax return.
•	 You may be able to file as head of household if your child lived with
you and you lived apart from your spouse/RDP during the entire last
six months of 2022.
Head of Household
For the specific requirements that must be met to qualify for head of
household (HOH) filing status, get FTB Pub. 1540, Tax Information for

Personal Income Tax Booklet  2022  Page 3

Head of Household Filing Status. In general, HOH filing status is for
unmarried individuals and certain married individuals or RDPs living
apart who provide a home for a specified relative. You may be entitled to
use HOH filing status if all of the following apply:
•	 You were unmarried and not in a registered domestic partnership, or
you met the requirements to be considered unmarried or considered
not in a registered domestic partnership on December 31, 2022.
•	 You paid more than one-half the cost of keeping up your home for
the year in 2022.
•	 For more than half the year, your home was the main home for you
and one of the specified relatives who by law can qualify you for HOH
filing status.
•	 You were not a nonresident alien at any time during the year.
For a child to qualify as your foster child for HOH purposes, the child
must either be placed with you by an authorized placement agency or by
order of a court.
California requires taxpayers who use HOH filing status to file form
FTB 3532, Head of Household Filing Status Schedule, to report how the
HOH filing status was determined.
Beginning in tax year 2018, if you do not attach a completed form
FTB 3532 to your tax return, we will deny your HOH filing status. For

more information about the HOH filing requirements, go to ftb.ca.gov
and search for hoh. To get form FTB 3532, see “Order Forms and
Publications” or go to ftb.ca.gov/forms.
Qualifying Surviving Spouse/RDP
Check the box on Form 540, line 5 and use the joint return tax rates for
2022 if all five of the following apply:
•	 Your spouse/RDP died in 2020 or 2021 and you did not remarry or
enter into another registered domestic partnership in 2022.
•	 You have a child, stepchild, or adopted child (not a foster child)
whom you can claim as a dependent or could claim as a dependent
except that, for 2022:
>	 The child had gross income of $4,400 or more;
>	 The child filed a joint return, or
>	 You could be claimed as a dependent on someone else’s return.
	 If the child is not claimed as your dependent, enter the child’s name in 	
	 the entry space under the “Qualifying surviving spouse/RDP” filing
	status.
•	 This child lived in your home for all of 2022. Temporary absences,
such as for vacation or school, count as time lived in the home.
•	 You paid over half the cost of keeping up your home for this child.
•	 You could have filed a joint tax return with your spouse/RDP the year
he or she died, even if you actually did not do so.

What’s New and Other Important Information for 2022
Differences between California and Federal Law
In general, for taxable years beginning on or after January 1, 2015,
California law conforms to the Internal Revenue Code (IRC) as of
January 1, 2015. However, there are continuing differences between
California and federal law. When California conforms to federal tax law
changes, we do not always adopt all of the changes made at the federal
level. For more information, go to ftb.ca.gov and search for conformity.
Additional information can be found in FTB Pub. 1001, Supplemental
Guidelines to California Adjustments, the instructions for California
Schedule CA (540), California Adjustments – Residents, and the
Business Entity tax booklets.
The instructions provided with California tax forms are a summary of
California tax law and are only intended to aid taxpayers in preparing
their state income tax returns. We include information that is most
useful to the greatest number of taxpayers in the limited space available.
It is not possible to include all requirements of the California Revenue
and Taxation Code (R&TC) in the instructions. Taxpayers should not
consider the instructions as authoritative law.
Conformity – For updates regarding federal acts, go to ftb.ca.gov and
search for conformity.

2022 Tax Law Changes/What’s New
Filing Status Name Changed to Qualifying Surviving Spouse/RDP –
The filing status qualifying widow(er) is now called qualifying surviving
spouse/RDP. The rules for the filing status have not changed.
Pass-Through Entity (PTE) Elective Tax and Other State Tax Credit
Calculation – For taxable years beginning on or after January 1, 2022,
and before January 1, 2026, the calculation of the other state tax credit
has changed. California law allows a qualified partner, member, or
shareholder to increase the net tax payable by the amount of the allowed
PTE tax credit for the taxable year. For more information, get Schedule S,
Other State Tax Credit, or see R&TC Section 17052.10.
College Access Tax Credit – The sunset date for the College Access Tax
Credit is extended until taxable years beginning before January 1, 2028.
For more information, get form FTB 3592, College Access Tax Credit.
Small Business and Nonprofit COVID-19 Supplemental Paid
Sick Leave Relief Grant – For taxable years beginning on or after
January 1, 2021, and before January 1, 2030, California law allows an
exclusion from gross income for grant allocations received by a taxpayer
pursuant to the California Small Business and Nonprofit COVID-19
Supplemental Paid Sick Leave Relief Grant Program that is established
by Section 12100.975 of the Government Code. For more information,
see R&TC Section 17158 and Schedule CA (540) instructions.

Page 4  Personal Income Tax Booklet  2022

Turf Replacement Water Conservation Program – For taxable years
beginning on or after January 1, 2022, and before January 1, 2027,
California law allows an exclusion from gross income for any amount
received as a rebate, voucher, or other financial incentive issued by
a public water system, as defined, local government, or state agency
for participation in a turf replacement water conservation program.
For more information, see Schedule CA (540) instructions and R&TC
Section 17138.2.
Fire Victims Trust Exclusion – For taxable years beginning before
January 1, 2028, California law allows a qualified taxpayer an exclusion
from gross income for any amount received from the Fire Victims
Trust, established pursuant to the order of the United States Bankruptcy
Court for the Northern District of California dated June 20, 2020, case
number 19-30088, docket number 8053. If a qualified taxpayer included
income for an amount received from the Fire Victims Trust in a prior
taxable year, the taxpayer can file an amended tax return for that year.
If the normal statute of limitations has expired, the taxpayer must file a
claim by September 29, 2023. See Schedule CA (540) instructions and
R&TC Section 17138.5.
Thomas and Woolsey Wildfires Exclusion – For taxable years beginning
before January 1, 2027, California law allows a qualified taxpayer an
exclusion from gross income for any amount received in a settlement
from Southern California Edison for claims relating to the 2017 Thomas
Fire or the 2018 Woolsey Fire. If a qualified taxpayer included income
for an amount received from these settlements in a prior taxable year,
the taxpayer can file an amended tax return for that year. If the normal
statute of limitations has expired, the taxpayer must file a claim by
September 29, 2023. For more information, see Schedule CA (540)
instructions and R&TC Section 17138.6
Reporting Requirements – Taxpayers may need to file form FTB 4197,
Information on Tax Expenditure Items, with the FTB to report tax
expenditure items as part of the FTB’s annual reporting requirements
under R&TC Section 41. To determine if you have an R&TC
Section 41 reporting requirement, see the R&TC Section 41 Reporting
Requirements section or get form FTB 4197.
High Road Cannabis Tax Credit – For taxable years beginning on
or after January 1, 2023, and before January 1, 2028, a High Road
Cannabis Tax Credit (HRCTC) will be available to a qualified taxpayer that
is a licensed commercial cannabis business that meets specified criteria.
The HRCTC is allowed in an amount equal to 25% of the total amount
of the qualified taxpayer’s qualified expenditures in the taxable year not
to exceed $250,000 per taxable year. Any credits not used in the taxable
year may be carried forward up to eight years. A qualified taxpayer must
request a tentative credit reservation from the FTB during the month of
July for each taxable year or within 30 days of the start of their taxable
year if the qualified taxpayer’s taxable year begins after July. For more
information, go to ftb.ca.gov and search for hrctc.

Middle Class Tax Refund – The California Middle Class Tax Refund
is a one-time payment issued to provide relief to qualified recipients.
California excludes this payment from gross income. For more
information, see Schedule CA (540) instructions.
Timeliness Penalty Abatement – For taxable years beginning on or after
January 1, 2022, an individual taxpayer may elect to request a one-time
abatement of a failure-to-file or failure-to-pay timeliness penalty either
orally or in writing, if the taxpayer was not previously required to file
a California personal income tax return or has not previously been
granted abatement under R&TC Section 19132.5, the taxpayer has filed
all required returns as of the date of the request for abatement, and the
taxpayer has paid, or is in a current arrangement to pay, all tax currently
due. For more information, see R&TC Section 19132.5.
Young Child Tax Credit Expansion – For taxable years beginning on or
after January 1, 2022, California expanded the YCTC eligibility to include
an eligible individual with a qualifying child who would otherwise have
been allowed the California EITC but that the individual has earned
income of zero dollars or less, does not have net losses in excess of
$32,490 in the taxable year, and does not have wages, salaries, tips,
and other employee compensation in excess of $32,490 in the taxable
year. For more information, get form FTB 3514, or go to ftb.ca.gov and
search for yctc.
Foster Youth Tax Credit – For taxable years beginning on or after
January 1, 2022, the refundable FYTC is available to an individual and/or
spouse/RDP age 18 to 25, who is allowed the California EITC for the
taxable year, was in foster care while 13 years of age or older and placed
through the California foster care system. The maximum amount of
credit allowable for each eligible taxpayer is $1,083. The credit amount
phases out as earned income exceeds the threshold amount of $25,000,
and completely phases out at $30,000. For more information, see
specific line instructions for Form 540, line 77, and get form FTB 3514,
see R&TC Section 17052.2, or go to ftb.ca.gov and search for fytc.
Voter Registration Information – For taxable years beginning on or
after January 1, 2022, we added a new Voter Registration Information
checkbox on the tax return. For voter registration information, check
the box on Form 540, Side 5 and go to sos.ca.gov/elections for more
information. Also, see specific line instructions for Form 540, Voter
Information Section and “Voting is Everybody’s Business” under
Additional Information section for more information.
Repeal of Net Operating Loss Suspension – For the 2022 taxable
year, the net operating loss suspension has been repealed. For more
information, see R&TC Section 17276.23 and get form FTB 3805V,
Net Operating Loss (NOL) Computation and NOL and Disaster Loss
Limitations – Individuals, Estates, and Trusts.
Repeal of Credit Limitation – For the 2022 taxable year, the credit
limitation has been repealed. For more information, see R&TC
Section 17039.3 and get Schedule P (540), Alternative Minimum Tax and
Credit Limitations – Residents.
Homeless Hiring Tax Credit – For taxable years beginning on or after
January 1, 2022, and before January 1, 2027, a Homeless Hiring Tax
Credit (HHTC) will be available to a qualified taxpayer that hires eligible
individuals. The amount of the tax credit will be based on the number of
hours the employee works in the taxable year. Employers must obtain
a certification of the individual’s homeless status from an organization
that works with the homeless and must receive a tentative credit
reservation for that employee. Any credits not used in the taxable year
may be carried forward up to three years. For more information, get
form FTB 3831, Homeless Hiring Tax Credit, or go to ftb.ca.gov and
search for hhtc.
Soundstage Filming Tax Credit – For taxable years beginning on or after
January 1, 2022, California R&TC Section 17053.98(k) allows a fourth
film credit, the Soundstage Filming Tax Credit, against tax. The credit
is allocated and certified by the California Film Commission (CFC). The
qualified taxpayer can:
•	 Offset the credit against income tax liability.
•	 Sell the credit to an unrelated party (independent films only).
•	 Assign the credit to an affiliated corporation.
•	 Apply the credit against qualified sales and use taxes.
For more information, get form FTB 3541, California Motion Picture and
Television Production Credit, form FTB 3551, Sale of Credit Attributable
to an Independent Film, go to ftb.ca.gov and search for motion picture,
or go to the CFC website at film.ca.gov and search for soundstage
filming tax credit.

State Historic Rehabilitation Tax Credit – For taxable years beginning
on or after January 1, 2021, a State Historic Rehabilitation Tax Credit is
available to qualified taxpayers that received a tax credit allocation from
the California Tax Credit Allocation Committee (CTCAC). The credit is
for the rehabilitation of certified historic structures and for individual
taxpayers, a qualified residence. Any credits not used in the taxable
year may be carried forward up to eight years. Taxpayers should apply
for the tax credit reservation with CTCAC and have received a tax credit
allocation confirmation number from CTCAC prior to claiming the State
Historic Rehabilitation Tax Credit on form FTB 3835. The credit was not
funded, and cannot be claimed, for tax year 2021. For more information,
get form FTB 3835, State Historic Rehabilitation Tax Credit, or go to the
California Office of Historic Preservation website at ohp.parks.ca.gov
and search for shrtc.
Federal Acts – In general, R&TC does not conform to the changes under the
following federal acts. California taxpayers continue to follow the IRC as of the
specified date of January 1, 2015, with modifications. For specific adjustments
due to the following acts, see the Schedule CA (540) instructions.
•	 Inflation Reduction Act of 2022 (enacted on August 16, 2022)
•	 American Rescue Plan Act (ARPA) of 2021 (enacted on
March 11, 2021)
•	 Consolidated Appropriations Act (CAA), 2021 (enacted on
December 27, 2020)
•	 Coronavirus Aid, Relief, and Economic Security (CARES) Act
(enacted on March 27, 2020)
•	 Setting Every Community Up for Retirement Enhancement (SECURE)
Act (enacted on December 20, 2019)

R&TC Section 41 Reporting Requirements
Taxpayers should file form FTB 4197 with the FTB to report tax
expenditure items as part of the FTB’s annual reporting requirements
under R&TC Section 41. “Tax expenditure” means a credit, deduction,
exclusion, exemption, or any other tax benefit provided for by the state.
The FTB uses information from form FTB 4197 for reports required by the
California Legislature. Taxpayers that have a reporting requirement for any
of the following should file form FTB 4197:
•	 For taxable years beginning before January 1, 2027, qualified
taxpayers who benefited from the exclusion from gross income for
any amount received in a settlement from Southern California Edison
for claims relating to the 2017 Thomas Fire or the 2018 Woolsey Fire.
•	 For taxable years beginning on January 1, 2022, and before
January 1, 2027, taxpayers who benefited from the exclusion of
gross income for any amount received as a rebate, voucher, or other
financial incentive issued by a public water system, as defined, local
government, or state agency for participation in a turf replacement
water conservation program.
•	 For taxable years beginning on or after January 1, 2021, taxpayers
who benefited from the exclusion from gross income for the
Paycheck Protection Program (PPP) loans forgiveness, other loan
forgiveness, the Economic Injury Disaster Loan (EIDL) advance
grant, restaurant revitalization grant, or shuttered venue operator
grant, and related eligible expense deductions.
•	 Beginning in taxable year 2020, a taxpayer operating a commercial
cannabis activity that is licensed under California Medicinal and
Adult-Use Cannabis Regulation and Safety Act.
For more information, get form FTB 4197.

Other Important Information
Expanded Definition of Qualified Higher Education Expenses – For
taxable years beginning on or after January 1, 2021, California law
conforms to the expanded definition of qualified higher education
expenses associated with participation in a registered apprenticeship
program and payment on the principal or interest of a qualified education
loan under the federal Further Consolidated Appropriations Act, 2020.
California Microbusiness COVID-19 Relief Grant – For taxable years
beginning on or after January 1, 2020, and before January 1, 2023,
California law allows an exclusion from gross income for grant allocations
received by a taxpayer pursuant to the California Microbusiness COVID-19
Relief Program that is administered by the Office of Small Business
Advocate (CalOSBA). For more information, see R&TC Section 17158.1
and Schedule CA (540) instructions.

Personal Income Tax Booklet  2022  Page 5

Shuttered Venue Operator Grant – For taxable years beginning on or
after January 1, 2019, California law allows an exclusion from gross
income for amounts awarded as a shuttered venue operator grant under
the CAA, 2021. The CAA, 2021, allows deductions for eligible expenses
paid for with grant amounts. California law conforms to this federal
provision, with modifications. For California purposes, these deductions
do not apply to an ineligible entity. “Ineligible entity” means a taxpayer that
is either a publicly-traded company or does not meet the 25% reduction
from gross receipts requirements under Section 311 of Division N of
the CAA, 2021. For more information, see R&TC Section 17158.3 and
Schedule CA (540) instructions.
California Venues Grant – For taxable years beginning on or after
September 1, 2020, and before January 1, 2030, California law allows an
exclusion from gross income for grant allocations received by a taxpayer
pursuant to the California Venues Grant Program that is administered by
CalOSBA. For more information, see R&TC Section 17158 and Schedule
CA (540) instructions.
Small Business COVID-19 Relief Grant Program – For taxable years
beginning on or after January 1, 2020, and before January 1, 2030,
California law allows an exclusion from gross income for grant
allocations received by a taxpayer pursuant to the COVID-19 Relief
Grant under Executive Order No. E 20/21-182 and the California
Small Business COVID-19 Relief Grant Program established by
Section 12100.83 of the Government Code. For more information, see
Schedule CA (540) instructions.
Income Exclusion for Rent Forgiveness – For taxable years beginning
on or after January 1, 2020, and before January 1, 2025, gross income
shall not include a tenant’s rent liability that is forgiven by a landlord or
rent forgiveness provided through funds grantees received as a direct
allocation from the Secretary of the Treasury based on the CAA, 2021. For
more information, see Schedule CA (540) instructions.
Paycheck Protection Program (PPP) Loans Forgiveness – For taxable
years beginning on or after January 1, 2019, California law allows an
exclusion from gross income for covered loan amounts forgiven under
the federal CARES Act, Paycheck Protection Program and Health Care
Enhancement Act, Paycheck Protection Program Flexibility Act of 2020,
the CAA, 2021, or the PPP Extension Act of 2021.
Also, the ARPA expands PPP eligibility to include “additional covered
nonprofit entities” which includes certain Code 501(c) nonprofit
organizations and Internet-only news publishers and Internet-only
periodical publishers. California law does not conform to this expansion of
PPP eligibility.
The CAA, 2021, allows deductions for eligible expenses paid for with
covered loan amounts. California law conforms to this federal provision,
with modifications. For California purposes, these deductions do not apply
to an ineligible entity. “Ineligible entity” means a taxpayer that is either a
publicly-traded company or does not meet the 25% reduction from gross
receipts requirements under Section 311 of Division N of the CAA, 2021.
For more information, see Schedule CA (540) instructions or R&TC
Section 17131.8 or go to ftb.ca.gov and search for AB 80.
Advance Grant Amount – For taxable years beginning on or after
January 1, 2019, California law conforms to the federal law regarding the
treatment for an emergency EIDL grant under the CARES Act or a targeted
EIDL advance under the CAA, 2021.
Other Loan Forgiveness – For taxable years beginning on or after
January 1, 2019, California law allows an exclusion from gross
income for borrowers of forgiveness of indebtedness described in
Section 1109(d)(2)(D) of the CARES Act as stated by section 278,
Division N of the CAA, 2021. The CAA, 2021, allows deductions for eligible
expenses paid for with covered loan amounts. California law conforms
to this federal provision, with modifications. For California purposes,
these deductions generally do not apply to an ineligible entity. “Ineligible
entity” means a taxpayer that is either a publicly-traded company or
does not meet the 25% reduction from gross receipts requirements
under Section 311 of the CAA, 2021. For more information, see
Schedule CA (540) instructions or go to ftb.ca.gov and search for AB 80.
Gross Income Exclusion for Bruce’s Beach – Effective September 30, 2021,
California law allows an exclusion from gross income for the first time sale
in the taxable year in which the land within Manhattan State Beach, known
as “Peck’s Manhattan Beach Tract Block 5” and commonly referred to as
“Bruce’s Beach” is sold, transferred, or encumbered. A recipient’s gross
income does not include the following:
•	 Any sale, transfer, or encumbrance of Bruce’s Beach;
•	 Any gain, income, or proceeds received that is directly derived from
the sale, transfer, or encumbrance of Bruce’s Beach.

Page 6  Personal Income Tax Booklet  2022

For more information, get Schedule D (540), California Capital Gain or
Loss Adjustment.
Moving Expense Deduction – For taxable years beginning on or after
January 1, 2021, taxpayers should file California form FTB 3913, Moving
Expense Deduction, to claim moving expense deductions. Attach the
completed form FTB 3913 to Form 540. For more information, see
Schedule CA (540) instructions and get form FTB 3913.
Elective Tax for Pass-Through Entities (PTE) and Credit for Owners –
For taxable years beginning on or after January 1, 2021, and before
January 1, 2026, California law allows an entity taxed as a partnership
or an “S” corporation to annually elect to pay an elective tax at a rate of
9.3% based on its qualified net income. The election shall be made on
an original, timely filed return and is irrevocable for the taxable year.
The law allows a credit against the personal income tax to a taxpayer,
other than a partnership, that is a partner, shareholder, or member of
a qualified entity that elects to pay the elective tax, in an amount equal
to 9.3% of the partner’s, shareholder’s, or member’s pro rata share or
distributive share and guaranteed payments of qualified net income
subject to the election made by the qualified entity. A disregarded
business entity and its partners or members cannot claim the credit,
except for a disregarded single member limited liability company
(SMLLC) that is owned by an individual, fiduciary, estate, or trust subject
to personal income tax. For more information, go to ftb.ca.gov and
search for pte elective tax and get the following new PTE elective tax
forms and instructions:
•	 Form FTB 3893, Pass-Through Entity Elective Tax Payment Voucher
•	 Form FTB 3804, Pass-Through Entity Elective Tax Calculation
•	 Form FTB 3804-CR, Pass-Through Entity Elective Tax Credit
Resident State Tax Filers List – For taxable years beginning on or after
January 1, 2020, taxpayers will include on their Form 540 the address
and county of their principal residence as part of the FTB’s annual
reporting requirements to the jury commissioner. Taxpayers that are
required to provide this information include persons who are 18 years of
age or older and have filed a California resident income tax return for the
preceding taxable year. The list of resident state tax filers will be used
as one of the source lists for jury selection by the jury commissioner’s
office. For more information, see specific line instructions or California
R&TC Sections 19548.4 and 19585.
Dependent Exemption Credit with No ID – For taxable years beginning
on or after January 1, 2018, taxpayers claiming a dependent exemption
credit for a dependent who is ineligible for a Social Security Number
(SSN) and a federal Individual Taxpayer Identification Number (ITIN)
may provide alternative information to the FTB to identify the dependent.
To claim the dependent exemption credit, taxpayers complete form
FTB 3568, Alternative Identifying Information for the Dependent
Exemption Credit, attach the form and required documentation to their
tax return, and write “no id” in the SSN field of line 10, Dependents, on
Form 540, California Resident Income Tax Return. For each dependent
being claimed that does not have an SSN and an ITIN, a form FTB 3568
must be provided along with supporting documentation.
Taxpayers may amend their tax return beginning with taxable year 2018
to claim the dependent exemption credit. For more information on how to
amend your tax returns, see “Instructions for Filing a 2022 Amended Return”.
Expansion for Credits Eligibility – For taxable years beginning on or
after January 1, 2020, California expanded EITC and YCTC eligibility
to allow either the federal ITIN or the SSN to be used by all eligible
individuals, their spouses, and qualifying children. If an ITIN is used,
eligible individuals should provide identifying documents upon request
of the FTB. Any valid SSN can be used, not only those that are valid for
work. Additionally, upon receiving a valid SSN, the individual should
notify the FTB in the time and manner prescribed by the FTB. The YCTC
is available if the eligible individual or spouse has a qualifying child
younger than six years old. For more information, go to ftb.ca.gov and
search for eitc, or get form FTB 3514.
Worker Status: Employees and Independent Contractors – Some
individuals may be classified as independent contractors for federal
purposes and employees for California purposes, which may also
cause changes in how their income and deductions are classified.
Proposition 22 was operative as of December 16, 2020, and may affect
a taxpayer’s worker classification. For more information, see Schedule
CA (540) instructions.
Minimum Essential Coverage Individual Mandate – For taxable years
beginning on or after January 1, 2020, California law requires residents
and their dependents to obtain and maintain minimum essential

coverage (MEC), also referred to as qualifying health care coverage.
Individuals who fail to maintain qualifying health care coverage for
any month during the taxable year will be subject to a penalty unless
they qualify for an exemption. For more information, see specific line
instructions for Form 540, line 92, or get the following health care
forms, instructions, and publications:
•	 Form FTB 3853, Health Coverage Exemptions and Individual Shared
Responsibility Penalty
•	 Form FTB 3895, California Health Insurance Marketplace Statement
•	 FTB Pub. 3895B, California Instructions for Filing Federal Forms
1094-B and 1095-B
•	 FTB Pub. 3895C, California Instructions for Filing Federal Forms
1094-C and 1095-C
Rental Real Estate Activities – For taxable years beginning on or after
January 1, 2020, the dollar limitation for the offset for rental real estate
activities shall not apply to the low income housing credit program.
For more information, see R&TC Section 17561(d)(1). Get form
FTB 3801-CR, Passive Activity Credit Limitations, for more information.
Taxpayers Conducting Commercial Cannabis Activity – Beginning in
taxable year 2020, California allows individuals and other taxpayers
operating under the personal income tax law to claim credits and
deductions of business expenses paid or incurred during the taxable
year in conducting commercial cannabis activity. Sole proprietors are
those that conduct a commercial cannabis activity that is licensed under
California Medicinal and Adult-Use Cannabis Regulation and Safety Act.
For more information, see Schedule CA (540) instructions.
Excess Business Loss Limitation – The CARES Act made amendments
to IRC Section 461(l) by eliminating the excess business loss limitation of
noncorporate taxpayers for taxable year 2020 and retroactively removing
the limitation for taxable years 2018 and 2019. California law does not
conform to those amendments. Also, California law does not conform to
the federal changes in the ARPA and the Inflation Reduction Act of 2022
that extend the limitation on excess business losses of noncorporate
taxpayers for taxable years beginning after December 31, 2020, and
ending before January 1, 2029. Complete form FTB 3461, California
Limitation on Business Losses, if you are a noncorporate taxpayer and
your net losses from all of your trades or businesses are more than
$270,000 ($540,000 for married taxpayers filing a joint return). For more
information, get form FTB 3461 and see Schedule CA (540) instructions.
Loophole Closure and Small Business and Working Families Tax
Relief Act of 2019 – The federal Tax Cuts and Jobs Act (TCJA) signed
into law on December 22, 2017, made changes to the IRC. California
R&TC does not conform to all of the changes. In general, for taxable
years beginning on or after January 1, 2019, California law conforms to
the following TCJA provisions:
•	 California Achieving a Better Life Experience (ABLE) Program
•	 Student loan discharged on account of death or disability
•	 Federal Deposit Insurance Corporation (FDIC) Premiums
•	 Excess employee compensation
•	 Excess business loss
Like-Kind Exchanges – The TCJA amended IRC Section 1031 limiting the
nonrecognition of gain or loss on like-kind exchanges to real property held
for productive use or investment. California law conforms to this change
under the TCJA for exchanges initiated after January 10, 2019. However, for
California purposes, with regard to individuals, this limitation only applies to:
•	 A taxpayer who is a head of household, a surviving spouse, or
spouse filing a joint return with adjusted gross income (AGI) of
$500,000 or more for the taxable year in which the exchange begins.
•	 Any other taxpayer filing an individual return with AGI of $250,000 or
more for the taxable year in which the exchange begins.
Get Schedule D-1, Sales of Business Property, for more information.
California requires taxpayers who exchange property located in
California for like‑kind property located outside of California under
IRC Section 1031, to file an annual information return with the FTB. For
more information, get form FTB 3840, California Like‑Kind Exchanges,
or go to ftb.ca.gov and search for like kind.
Young Child Tax Credit – For taxable years beginning on or after
January 1, 2019, the refundable YCTC is available to taxpayers who
also qualify for the California EITC and who have at least one qualifying
child who is younger than six years old as of the last day of the
taxable year. For taxable year 2022, the maximum amount of credit
allowable for a qualified taxpayer is $1,083. The credit amount phases
out as earned income exceeds the threshold amount of $25,000, and
completely phases out at $30,000. For more information, see specific

line instructions for Form 540, line 76, and get form FTB 3514, or go to
ftb.ca.gov and search for yctc.
Net Operating Loss Carrybacks – For taxable years beginning on or
after January 1, 2019, net operating loss carrybacks are not allowed.
Alimony – California law does not conform to changes made by the
TCJA to federal law regarding alimony and separate maintenance
payments that are not deductible by the payor spouse, and are not
includable in the income of the receiving spouse, if made under any
divorce or separation agreement executed after December 31, 2018,
or executed on or before December 31, 2018, and modified after that
date (if the modification expressly provides that the amendments apply).
See Schedule CA (540) specific line instructions for more information.
Small Business Accounting/Percentage of Completion Method – For
taxable years beginning on or after January 1, 2019, California law
generally conforms to the TCJA’s definition of small businesses as
taxpayers whose average annual gross receipts over three years do
not exceed $25 million. These small businesses are exempt from the
requirement of using the Percentage of Completion Method of accounting
for any construction contract if the contract is estimated to be completed
within two years from the date the contract was entered into. A taxpayer
may elect to apply the provision regarding accounting for long term
contracts to contracts entered into on or after January 1, 2018.
Student Loan Discharged Due to Closure of a For-Profit School –
California law allows an income exclusion for an eligible individual who
is granted a discharge of any student loan under specified conditions.
This income exclusion has now been expanded to include a discharge
of student loans occurring on or after January 1, 2019, and before
January 1, 2024, for individuals who attended a Brightwood College
school or a location of The Art Institute of California. Additional
information can be found in the instructions for Schedule CA (540).
Charitable Contribution and Business Expense Deductions Disallowance
– For taxable years beginning on or after January 1, 2014, California
law disallows a charitable contribution deduction to an educational
organization that is a postsecondary institution or to the Key Worldwide
Foundation, and a deduction for a business expense related to a payment
to the Edge College and Career Network, LLC, to a taxpayer who meets
specific conditions, including that they are named in any of several
specified criminal complaints. For taxable years beginning on or after
2014, file an amended Form 540 and Schedule X, California Explanation
of Amended Return Changes, to report the correct amount of charitable
contribution and business expense deductions, as applicable. Additional
information can be found in the instructions for Schedule CA (540).
Real Estate Withholding Statement – Effective January 1, 2020, the
real estate withholding forms and instructions have been consolidated
into one new Form 593, Real Estate Withholding Statement. For more
information, get Form 593.
California Earned Income Tax Credit – For taxable years beginning on
or after January 1, 2018, the age limit for an eligible individual without a
qualifying child is revised to 18 years or older. For more information, go
to ftb.ca.gov and search for eitc or get form FTB 3514.
Native American Earned Income Exemption – For taxable years
beginning on or after January 1, 2018, federally recognized tribal
members living in California Indian country who earn income from any
federally recognized California Indian country are exempt from California
taxation. This exemption applies only to earned income. Enrolled tribal
members who receive per capita income must reside in their affiliated
tribe’s Indian country to qualify for tax exempt status. Additional
information can be found in the instructions for Schedule CA (540) and
form FTB 3504, Enrolled Tribal Member Certification.
Global Intangible Low-Taxed Income (GILTI) Under IRC Section 951A –
Under federal law, if you are a U.S. shareholder of a controlled foreign
corporation, you must include your GILTI in your income. California
law does not conform. For more information, see Schedule CA (540)
instructions.
Wrongful Incarceration Exclusion – California law conforms to
federal law excluding from gross income certain amounts received by
wrongfully incarcerated individuals for taxable years beginning before,
on, or after January 1, 2018.
Schedule X, California Explanation of Amended Return Changes – For
taxable years beginning on or after January 1, 2017, use Schedule X to
determine any additional amount you owe or refund due to you, and to
provide reason(s) for amending your previously filed income tax return.
For additional information, see “Instructions for Filing a 2022 Amended
Return”.

Personal Income Tax Booklet  2022  Page 7

Improper Withholding on Severance Paid to Veterans – The federal
Combat‑Injured Veterans Tax Fairness Act of 2016 gives veterans who
retired from the Armed Forces for medical reasons additional time
to claim a refund if they had taxes improperly withheld from their
severance pay. If you filed an amended return with the IRS on this issue,
you have two years to file your amended California return.
California Achieving a Better Life Experience (ABLE) Program – For
taxable years beginning on or after January 1, 2016, the California
Qualified ABLE Program was established and California law generally
conforms to the federal income tax treatment of ABLE accounts.
This program was established to help blind or disabled U.S. residents
save money in a tax-favored ABLE account to maintain health,
independence, and quality of life. Additional information can be found in
the instructions of form FTB 3805P, Additional Taxes on Qualified Plans
(Including IRAs) and Other Tax-Favored Accounts.
Electronic Funds Withdrawal (EFW) – Make extension or estimated tax
payments using tax preparation software. Check with your software provider
to determine if they support EFW for extension or estimated tax payments.
Payments and Credits Applied to Use Tax – For taxable years beginning
on or after January 1, 2015, if a taxpayer includes use tax on their
personal income tax return, payments and credits will be applied to
use tax first, then towards income tax, interest, and penalties. For more
information, see specific line instructions for Form 540, line 91.
Dependent Social Security Number – Taxpayers claiming an exemption
credit must write each dependent’s SSN in the spaces provided within
line 10 for the California Form 540. If you are claiming an exemption
credit for a dependent who is ineligible for an SSN and a federal ITIN,
you may complete and provide form FTB 3568 with required
documentation attached to the tax return and write “no id” in the SSN
field of line 10. For more information, see specific line instructions for
Form 540, line 10, and get form FTB 3568.
Financial Incentive for Seismic Improvement – Taxpayers can exclude
from gross income any amount received as loan forgiveness, grant,
credit, rebate, voucher, or other financial incentive issued by the California
Residential Mitigation Program or the California Earthquake Authority to
assist a residential property owner or occupant with expenses paid, or
obligations incurred, for earthquake loss mitigation. Additional information
can be found in the instructions for Schedule CA (540).
Disaster Losses – For taxable years beginning on or after
January 1, 2014, and before January 1, 2024, taxpayers may deduct
a disaster loss for any loss sustained in any city, county, or city and
county in California that is proclaimed by the Governor to be in a state
of emergency. For these Governor-only declared disasters, subsequent
state legislation is not required to activate the disaster loss provisions.
Additional information can be found in the instructions for form
FTB 3805V.
Penalty Assessed by Professional Sports League – An owner of all or
part of a professional sports franchise will not be allowed a deduction for the
amount of any fine or penalty paid or incurred, that was assessed or imposed
by the professional sports league that includes that franchise. Additional
information can be found in the instructions for Schedule CA (540).
Mandatory Electronic Payments – You are required to remit all your
payments electronically once you make an estimated tax or extension
payment exceeding $20,000 or you file an original tax 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:
•	 You have not made an estimated tax or extension payment in excess
of $20,000 during the current or previous taxable year.
•	 Your total tax liability reported for the previous taxable year did not
exceed $80,000.
•	 The amount you paid is not representative of your total tax liability.
For more information or to obtain the waiver form, go to
ftb.ca.gov/e-pay. Electronic payments can be made using Web Pay on
the FTB’s website, EFW as part of the e-file return, or your credit card.

Page 8  Personal Income Tax Booklet  2022

Estimated Tax Payments – Taxpayers are required to pay 30% of the
required annual payment for the 1st required installment, 40% of the
required annual payment for the 2nd required installment, no installment
is due for the 3rd required installment, and 30% of the required annual
payment for the 4th required installment.
Taxpayers with a tax liability less than $500 ($250 for married/RDP filing
separately) do not need to make estimated tax payments.
Backup Withholding – With certain limited exceptions, payers that
are required to withhold and remit backup withholding to the IRS are
also required to withhold and remit to the FTB on income sourced to
California. If the payee has backup withholding, the payee must contact
the FTB to provide a valid taxpayer identification number, before filing
the tax return. Failure to provide a valid taxpayer identification number
may result in a denial of the backup withholding credit. For more
information, go to ftb.ca.gov and search for backup withholding.
Registered Domestic Partners (RDP) – Under California law, RDPs
must file their California income tax return using either the married/RDP
filing jointly or married/RDP filing separately filing status. RDPs have the
same legal benefits, protections, and responsibilities as married couples
unless otherwise specified.
If you entered into a same sex legal union in another state, other than
a marriage, and that union has been determined to be substantially
equivalent to a California registered domestic partnership, you
are required to file a California income tax return using either the
married/RDP filing jointly or married/RDP filing separately filing status.
For purposes of California income tax, references to a spouse, husband,
or wife also refer to a California RDP, unless otherwise specified.
When we use the initials RDP, they refer to both a California registered
domestic “partner” and a California registered domestic “partnership,”
as applicable. For more information on RDPs, get FTB Pub. 737.
Direct Deposit Refund – You can request a direct deposit refund on
your tax ­return whether you e-file or file a paper tax return. Be sure to
fill in the routing and account numbers carefully and double-check the
numbers for accuracy to avoid it being rejected by your bank.
Direct Deposit for ScholarShare 529 College Savings Plans – If you
have a ScholarShare 529 College Savings Plan account maintained by
the ScholarShare Investment Board, you may have your refund directly
deposited to your ScholarShare account. Go to scholarshare529.com
for instructions.
California Disclosure Obligations – If the individual was involved in a
reportable transaction, including a listed transaction, the individual may
have a disclosure requirement. Attach federal Form 8886, Reportable
Transaction Disclosure Statement, to the back of the California tax return
along with any other supporting schedules. If this is the first time the
reportable transaction is disclosed on the tax return, send a duplicate
copy of the federal Form 8886 to the address below. The FTB may
impose penalties if the individual fails to file federal Form 8886, or fails
to provide any other required information. A material advisor is required
to provide a reportable transaction number to all taxpayers and material
advisors for whom the material advisor acts as a material advisor.
	

TAX SHELTER FILING
ABS 389 MS F340
FRANCHISE TAX BOARD
PO BOX 1673
SACRAMENTO CA 95812-9900

For more information, go to ftb.ca.gov and search for disclosure
obligation.

Which Form Should I Use?
e-file and you won’t have to
decide which form to use!
The software will select the
correct form for you.

Were you and your spouse/RDP residents during the entire year 2022?
Yes.	Check the chart below to see which form to use.
No.	 Use Form 540NR. To download or order the California Nonresident or Part‑Year Resident Booklet, go
to ftb.ca.gov/forms or see “Where to Get Income Tax Forms and Publications.”

Form 540

Form 540 2EZ

Form not included in this booklet. If you qualify
to use Form 540 2EZ, see “Where To Get Income
Tax Forms and Publications” to download or
order this form.

Filing Status

Single, married/RDP filing jointly, head of
household, qualifying surviving spouse/RDP

Any filing status

Dependents
Amount of Income

0-3 allowed

All dependents you are entitled to claim

Total income of:
•	$100,000 or less if single or head of household
•	$200,000 or less if married/RDP filing jointly or
qualifying surviving spouse/RDP
You cannot use Form 540 2EZ if you (or your
spouse/RDP) can be claimed as a dependent
by another taxpayer, and your TOTAL income is
less than or equal to $17,252 if single; $34,554 if
married/RDP filing jointly or qualifying surviving
spouse/RDP; or $24,454 if head of household.

Any amount of income

Sources of Income

Only income from:
•	Wages, salaries, and tips
•	Taxable interest, dividends, and pensions
•	Taxable scholarship and fellowship grants (only if
reported on federal Form(s) W‑2)
•	Capital gains from mutual funds (reported on
federal Form 1099‑DIV, box 2a only)
•	Unemployment compensation reported on federal
Form 1099-G
•	Paid Family Leave Insurance
•	U.S. social security benefits
•	Tier 1 and tier 2 railroad retirement payments

All sources of income

Adjustments to
Income
Standard Deduction
Itemized Deductions
Payments

No adjustments to income

All adjustments to income

Allowed

Allowed

No itemized deductions

All itemized deductions

Only withholding shown on federal Form(s) W-2
and 1099‑R

•	Withholding from all sources
•	Estimated tax payments
•	Payments made with extension
•	Excess State Disability Insurance (SDI) or
Voluntary Plan Disability Insurance (VPDI)

Tax Credits

•	Refundable California earned income tax credit
•	Refundable young child tax credit
•	Refundable foster youth tax credit
•	Personal exemption credit
•	Senior exemption credit
•	Up to three dependent exemption credits
•	Nonrefundable renter’s credit

All tax credits

Other Taxes

Only tax computed using the 540 2EZ Table

All taxes

If you qualify to use Form 540 2EZ, you may be eligible to use CalFile.
Visit ftb.ca.gov and search for calfile. It’s fast, easy, and free.
If you don’t qualify for CalFile, you qualify for e-file.
Go to ftb.ca.gov and search for efile options.

Personal Income Tax Booklet  2022  Page 9 

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ftb.ca.gov

Page 10  Personal Income Tax Booklet  2022

2022 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, U.S. Individual
Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors,
before you begin your Form 540, California Resident Income Tax Return.
Use info