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repay the victim of wrongful incarceration. To top it off, once you do receive this compensation for this horrendous crime against you, you have to pay taxes on it. Imagine that. Well, unfortunately, this is true. You have to pay taxes on wrongful incarceration payments for federal tax purposes. This is simply disgraceful. In order to receive a completely tax free treatment for your compensation for incarceration, you must have “suffered physical injuries and physical sickness while incarcerated.” What!? No, this is just not right! The state of California does not think this is right either. You can exclude 100% of the wrongful incarceration compensation amount for California tax purposes. Thank G-d someone is using their brain and thinking right. Enter whatever wrongful incarceration amount which is taxable for federal tax purposes on your California Schedule CA, line 21f, column B. |
| Grants paid to low-income individuals |
| Many individuals start out in life as low income individuals. There are many low income families doing their best to send their kids to school. Any help available to these low income families will make a difference in their lives. Every tax season, for example, there are many low income families who anticipate the Earned Income Credit to catch up on bills incurred during the holidays. There are grants offered to low income taxpayers by the Internal Revenue Service. These grants are available to taxpayers who usually don’t have a filing obligation. This payment offered by the Internal Revenue Service and it is called Stimulus payment. To qualify for the stimulus payment, your income has to be at least $3,000. In addition, the taxpayer can qualify for a payment of $300 for each child who meets the requirements and is under 17 years old. |
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Talking about grants for low-income taxpayers, if you receive a grant to construct or retrofit your dwelling for energy efficiency, the proceeds are not taxable for California tax purposes. You can exclude any amounts received for such grants under California tax law. Federal tax law does not allow for any exclusion from such grants. Therefore, you must make an adjustment to allow for this exclusion under California tax law by entering the amount which was included on your federal gross income on California Schedule CA, line 21f, column B. |
| Death benefits received from the State of California for military members killed in the line of duty |
| California pays death benefits to families for military members killed in military duty. Death benefits paid to the members of a military member killed in the line of duty is nontaxable income and excluded from federal gross income. Section 1477 of Title 10 of the U.S. code and the HEART Act of 2008 (Heroes Earnings Assistance and Relief Tax Act) provides that any money received by survivors as a result of death of a military member will be excludable from federal taxation. This income is excludable under Section 134 of the IRS Code. California conforms with the federal HEART Act of 2008 with respect to the rollover of death gratuity payments into a retirement account such as an IRA without applying any contribution limits to the amounts. This means that there would not be any penalties for exceeding the contribution IRA or retirement plan limits. |
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If you receive a death gratuity from the state of California, this amount can be excluded if the military member died or was killed after March 1, 2003. The military member must have been on duty when he or she died or was killed. If the amount received which covers this period is taxable for federal, you can exclude it from California income by entering the amount on California Schedule CA of Form 540 or Form 540NR, line 21f, column B. |
| Mortgage forgiveness debt relief |
| If you are experiencing problems with your mortgage payments there is a plethora of assistance from many organizations. The United States economy has been shaky for a while now and all this help available is a result of the bad U.S. economy. All this trouble seems to have started on September 11, 2001, but maybe it started before then. The Internal Revenue Service passed the Mortgage Debt Relief Act of 2007 to ameliorate the situation. With |
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| Revised: 07/09/15 |
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