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| purposes. The rule applies mainly to care provider facilities but also to individual care providers. If an individual has his or her own home and only stays a few nights at the care recipient’s home, the payments received are taxable to the recipient. However, if the individual that provides the care does not have his or her separate home and lives in the care recipient’s home, the payments are completely tax free to the IHSS provider for federal tax purposes. On the other hand, California law allows an exclusion from gross income of IHSS supplementary payments received by providers. California allows a complete exclusion of IHSS payments due to the fact that the IHSS providers only received these supplementary payments if they paid a sales tax on the IHSS services they provide. Usually, the supplementary payments are equal to the sales tax paid. Therefore, including supplementary payments in income and paying California personal income tax on these amounts would be considered double taxation. If you included any IHSS supplementary payments in federal wages, enter the amount on Schedule CA line 7, column B to exclude them from California gross income since those payments are not taxable for California tax purposes. There should not be any double taxation for amounts which the recipient already paid a state tax. |
| United States Savings Bonds |
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Most taxpayers are on the cash basis of accounting and don’t even know it. Some including many corporations are on the accrual basis of accounting. If you own U.S. savings bonds, you must pay federal tax on the interest received from these bonds. When you report the interest, depends on which type of taxpayer you are. Normally, there are two kinds of taxpayers. One is the accrual method taxpayer and the other is the cash method taxpayer. Most taxpayers are cash method taxpayers. Many large businesses and corporations are accrual method taxpayers. If you are an accrual method taxpayer, you report interest on the bond when the interest is earned. If you are a cash method taxpayer, you report interest on these bonds when the interest is available to you or when you receive it. Most interest income received regardless of when you need to pay tax on the interest is taxable for federal tax purposes. However, for California tax purposes any interest received from United States bonds (or obligations) are nontaxable. It is important to note though, that California does not consider Federal National Mortgage Association (Fannie Mae), Government National Mortgage Association (Ginnie Mae), or Federal Home Loan Mortgage Corporation (Freddie Mac) to be federal obligations. Therefore, interest you receive from these investments are taxable to California. The interest on United States bonds that is included in your federal income must be adjusted for California tax purposes on Schedule CA of Form 540 or Form 540NR, line 8, column B. Making this adjustment on Schedule CA will exclude the interest from being included in the total California taxable gross income amount. When it comes to investments and United States savings bonds, your basis of accounting could make a different on the timing of your tax obligation. |
| Non-California bonds - Other states |
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Non-California bonds from other states are taxable for California tax purposes. If you received interest from your investments in bonds from state or localities, you will not need to pay tax on these bonds for federal tax purposes because federal does not tax them. Usually this is true if the bonds were issued by one of the fifty states, Washington D.C., any of the possessions of the United States. Also some of the bonds issued by Indian tribal governments are treated as if they were issued by a state and thus are not taxable. However, the Indian tribal bonds that are not taxable for federal tax purposes are only those bonds which are issued after 1982. |
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However, California taxes the interest received from bonds that are not from California except the United States Bonds previously discussed. This means that if you hold any non-California bonds other than federal U.S. bonds, such as Indian tribal bonds, or bonds received from the other states or possessions, you need to look forward to paying the tax on the interest earned from these bonds. The interest that is taxable to federal and that is not taxable to California must be accounted for by entering the amount on Schedule CA line 8, column C. You have to |
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| Revised: 07/09/15 |
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