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| especially the high incentives given for switching from grass and the greens to the dry stuff. California offers rebates, vouchers and other water conservation plans such as turf removal water conservation programs. If you get any kind of incentive in cash and this amount was taxable for federal, you can deduct it from your California tax return by entering the amount on Schedule CA of Form 540 or 540NR, line 21f, column B. Any of these items are not taxable for California tax purposes. |
| California lottery winnings |
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For federal tax purposes, gambling and lottery winnings are taxable on your tax return. Anything that is considered gambling is taxable for federal tax purposes. Gambling could be in the form of lotteries, horse races, raffles, casinos, California lottery winnings, and any prizes that you win. You can deduct gambling expenses up to the gambling winnings for federal tax purposes. For California tax purpose, essentially the rules are the same as federal and gambling winnings are taxable and the expenses of gambling are deductible up to the winnings. This is true, unless the winnings are from the California lottery. Winnings from the California lottery are not taxable for California and therefore any gambling expenses you have for these California lottery winnings are not deductible expenses. When you prepare your California tax return, make sure you include gambling winnings that are not from the California lottery. If you had California lottery tickets and you have included them in your federal tax return because they are taxable for federal, you must make an adjustment for California. Enter the amounts that are not taxable for California on line 21a, column B of Schedule CA to subtract the winnings from your California gross income. You also need to make sure that you have adjusted any gambling expenses claimed on your federal Schedule A that pertain to California lottery winnings. If you are not claiming the income, you cannot claim the expenses that pertain to that income. |
| Reward from a crime hotline |
| Are you a whistleblower? Believe it or not, claiming rewards for reporting a crime is a profession for some. Like in every profession, you get compensated for your services. Just like there are bounty hunters, there are people who are pros at doing this kind of work. For example, did you know that the Internal Revenue Service, the IRS Whistleblower Office, to be more specific, pays you up to 30 percent of the additional money it collects from its clients for your whistleblower services? This sounds very much like a commission. You only get paid if you deliver results! Then you have to pay taxes to the Internal Revenue Service on the amounts you received from the Internal Revenue Service for your services. Amounts you receive for reporting crime are taxable by the Internal Revenue Service. |
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For California amounts received for reporting crime are also taxable. That is, unless, the amounts for reporting crime are for amounts authorized by a government agency, by a nonprofit organization or the amounts are received from a crime hotline that is established by a government agency. If the amounts for crime compensation is from an authorized government agency or any of the above mentioned, then you must exclude the amount from California gross income by entering it on the California Schedule CA, line 21f, column B. Any amount of compensation for reporting criminal activity that is taxable by federal but should be taxable by California should be removed from California gross income. If you have a crime to report such as tax evasion, you most like will receive a reward for reporting such crime to the proper authorities. Then look closely at the implications of making the reports both tax wise and safety wise. Whatever you do, be very discreet. |
| Wrongful incarceration payments |
| Just imagine how horrible it must be to incarcerated for any crime. Now, imagine how much more horrible it would be to be incarcerated for something you did not do. No compensation or tax deduction would ever be enough to |
| Copyright © 2014 [Hera's Income Tax School]. All Annual Federal Tax Refresher Course rights reserved. |
| Revised: 07/09/15 |
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