Tax season kicks off this week at the Franchise Tax Board (FTB). Every year, FTB provides taxpayers with a list of important updates and reminders for the upcoming tax season.
"We encourage all Californians to make use of our online services, including the ability to file a state return online for free and quickly secure a refund," said State Controller and FTB Chair Betty T. Yee. "More people than ever will qualify for key state tax credits, including the expanded California Earned Income Tax Credit and the Young Child Tax Credit. Combined, these refundable credits can total hundreds or even thousands of dollars. We hope more Californians will claim these credits, especially those who do not earn enough to be required to file. COVID-19 has affected everyone to varying degrees. We encourage people to file as early as possible and check their eligibility for each tax credit to get the full refund they deserve."
For free help with your tax return and a list of the Volunteer Income Tax Assistance (VITA) program locations throughout California, go to ftb.ca.gov. In-person VITA services may be limited and are subject to change due to COVID-19 safety measures. Please confirm your VITA site is open on the day of your planned appointment before arriving and practice any public health measures in place at that time.
Main Street Small Business Tax Credit
The Main Street Small Business Tax Credit provides financial relief to qualified small businesses for the economic disruption in 2020, resulting in unprecedented job losses. Taxpayers can use the credit against income taxes or can make an irrevocable election to apply the credit against sales and use taxes. The credits are allocated by the California Department of Tax and Fee Administration (CDTFA) on a first-come, first-served basis until the credits are exhausted. CDTFA will accept applications for a tentative credit reservation through January 15, 2021. Click here for more information about the tax credit.
ITIN Users are now eligible for the California Earned Income Tax Credit (CalEITC)
New this year, CalEITC eligibility expands to taxpayers with an Individual Taxpayer Identification Number (ITIN). Additionally, taxpayers who qualify for CalEITC and have at least one qualifying child under the age of six can get up to a $1,000 Young Child Tax Credit (YCTC). These cash-back state tax credits can lower the amount of tax owed or put money back into the pockets of California workers. When combined with the federal EITC, CalEITC and YCTC can be worth thousands of dollars to families. For more information about CalEITC, YCTC, and the federal EITC, visit www.ftb.ca.gov/caleitc.
Health Care Coverage penalties for tax returns in 2021
Last year, a new state law required Californians to have qualifying health insurance coverage throughout the year. Those who do not maintain qualifying medical coverage are subject to a penalty of $750 or more when they file their tax returns. The penalty for a dependent child is half of what it would be for an adult. A married couple without coverage could see a penalty of $1,500 or more, and for a family of four with two dependent children, it could be $2,250 or more. You can still get health coverage and financial help at CoveredCA.com. It is crucial to get health coverage now to avoid a penalty in 2022. For information, visit ftb.ca.gov/healthmandate.
State tax deduction for losses from a disaster
Disaster loss rules apply to victims in governor-declared or presidentially declared disaster areas, most notably in areas hit by wildfires. Taxpayers may claim a disaster loss in the tax year when the disaster occurred, or by filing an amended or original return from the year before the disaster occurred. Upon request, FTB will provide replacement state tax documents for free for those who lost them due to a disaster. For more information and a complete list of all disasters declared by the governor, visit ftb.ca.gov and search for disaster loss.
Beware of scams
FTB encourages taxpayers to protect themselves from scam artists seeking to steal refunds and identities this tax filing season. Scammers often prey on taxpayers by impersonating Internal Revenue Service (IRS) or FTB employees. Through phone calls and email, these fraudsters attempt to, among other things, trick taxpayers into sending money not owed or into providing personal information that may be used to file fraudulent returns and steal refunds.
If FTB or IRS staff need to reach a taxpayer to verify a return or discuss a bill, both agencies begin by sending letters via postal mail. If the taxpayer does not respond, the FTB or IRS may reach out by phone, with courteous agents identifying themselves and never threatening a person. Further, neither agency will demand immediate tax payment over the phone or demand payment with a third-party or pre-paid debit card.
If you receive a letter from FTB or the IRS that appears suspicious, contact the FTB at 800.852.5711 or the IRS at 800.829.1040 to verify authenticity. Taxpayers may also check the FTB “Letters” webpage and the "Understanding Your IRS Notice or Letter" webpage.
FTB's MyFTB service allows users to view their tax documents, check balances due, access tax calculators, send secure messages to FTB staff, and more. FTB offers free electronic filing for state tax returns through CalFile, an easy-to-use tool available to more than 6.5 million taxpayers. CalFile allows taxpayers to file directly with FTB and provides instant confirmation. Taxpayers can check their qualifications for CalFile or find a list of other filing options at ftb.ca.gov. You can also make your estimate payment, tax payments, and bill payments.
FTB’s tax programs help collect more than 70 percent of the state’s General Fund. For more information on other taxes and fees in California, visit taxes.ca.gov.
We are continually updating our COVID-19 page with the latest information regarding deadlines and other important tax information. Please make sure to visit this page for the latest news regarding the tax filing season.
FTB administers two of California's major tax programs: Personal Income Tax and the Corporation Tax. FTB also administers other nontax programs and delinquent debt collection functions, including delinquent vehicle registration debt collections on behalf of the Department of Motor Vehicles, and court–ordered debt. Annually, FTB’s tax programs collect more than 75 percent of the state’s general fund. For more information on other taxes and fees in California, visit taxes.ca.gov.