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| agree with the tax rules, there are no differences and therefore no need for Schedule CA of Form 540. When California agrees with the federal credits and deductions it is considered conformity. California tax laws conform to the federal tax laws for the most part. When you file tax returns you have to file a tax return for federal and also a tax return for California. California is one of the fifty states which require the filing of a tax return. There are only seven states which don’t require filing of a tax return and California is not one of these states. I’ll mention them here just for fun: These states are Alaska, Florida, Nevada, South Dakota, Texas, Washington (state) and Wyoming. If you prepare tax returns in one of these seven states, you don’t need to worry about filing a state tax return. Even if you live in California, you’ll get a few of those. You know, the taxpayers who move from state to state. At times you your client, the taxpayer, may have live part of the year in California and the other part in another state. Therefore, knowing which states don’t require filing a tax return is good to know and can save you some research time. If you know this, you only need to worry about filing the federal return for this state or for part of the year the taxpayer lived in that no income tax state. California is one of the states that requires the filing of a state tax return. |
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Military pay |
| If you have to prepare a tax return involving a soldier, you need to find everything you need to find out about soldiers and military pay. When preparing returns with military pay situations you will most of the time have to deal with nonresident and part-year resident taxpayers. In some situations, the military taxpayer may have lived in California all year but not be liable for California taxes. Other times, the taxpayer may be liable dependent on when the soldier entered the military and when he or her started living in California. As a rule, the military taxpayer is considered a resident of state from which he or she entered the military. The individual does not lose his or her residence or domicile in any state when in compliance with military orders. Likewise, the person does not acquire a new residence or domicile by being in compliance with military orders. Some will be full-year residents, others will be nonresidents and still others will be part-year residents. If you have to file a nonresident California tax return you would have to use Form 540NR. You would use this Form for either a short form or long form California tax return. Active duty military members is included in your California income calculations as taxable income to California only if the military taxpayer is domiciled and stationed in California and the pay is earned in California. The military taxpayer could be living in California but not be domiciled in California. An individual could be domiciled somewhere else if somewhere else is where they do business such as their banking and where they pay a mortgage and where they have their vehicles registered. Being a soldier sometimes involves coming to California from another state and this does not necessarily mean that this soldier is a California resident. |
| Sick pay received under the Federal Insurance Contributions Act and Railroad Retirement Act |
| For the most part, sick pay is not taxable, but it could be. Do your homework and make sure that your sick pay is not taxable before you decide not to include on your federal tax return. If you received sick pay benefits, you must report the amount received for personal injury or sickness if the insurance was paid for by your employer. Amounts received from plans paid for by you are usually not taxable for federal tax purposes. If both you and your employer paid for the plan, only the amount received that pertains to what your employer paid is taxable. However, this is true only for your federal tax return. California does not tax any income received due to sick pay under the Federal Insurance Contributions Act or the Railroad Retirement Act. This also holds true for any social security benefits you receive. These amounts must be adjusted on Schedule CA of Form 540. Usually you show an adjustment for any of these amounts since they are not taxable for your California tax return on line 7, column C of Schedule CA of Form 540 or 540NR. You know how these could be taxable on your federal tax return depending on who paid for the plan? Well, for California, it does not matter if the amounts are taxable or nontaxable for federal tax purposes, or if the employer paid for the plan or not, the amounts are nontaxable for California regardless. |
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| Revised: 07/09/15 |
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