What’s new for 2018 California tax returns? The list of changes is long. That’s why the CA Franchise Tax Board has created a “Taxnews” page, with information about tax filing. The page includes information about credits such as the earned income credit, the new employment credit and the CA Competes credit, plus instructions for many other tax topics.
A few of the highlights include:
Federal Tax Reform
The Tax Cuts and Jobs Act (TCJA) signed into law on December 22, 2017, made changes to the Internal Revenue Code (IRC). In general, California Revenue and Taxation Code does not conform to the changes. California taxpayers continue to follow the IRC as of the specified date of January 1, 2015, with modifications. The IRS issued Notice 2019-11 to provide for a waiver of the estimated tax penalty for taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the TCJA, the far-reaching tax reform law enacted in December 2017. For California purposes, the TJCA had no general impact to the amount of state income tax an individual California state income taxpayer would owe. Thus, it is not necessary for California provide a similar waiver as described in IRS Notice 2019-11.
California Earned Income Tax Credit (EITC)
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. Search the FTB website for EITC or get form California Earned Income Tax Credit (FTB 3514) for more information.
New Employment Credit
The sunset date for the New Employment Credit is extended until taxable years beginning before January 1, 2026. Search the FTB website for NEC or get form New Employment Credit (FTB 3554) for more information.
California Competes Tax Credit
The sunset date for the California Competes Tax Credit is extended until taxable years beginning before January 1, 2030. Visit the GO-Biz website at business.ca.gov, search the FTB website for ca competes, or get form California Competes Tax Credit (FTB 3531) for more information.
There is plenty more on the FTB website, so take a look; then contact us for your tax prep appointment. We can answer your questions and help you navigate the changes. https://bit.ly/2HMh8sa