Dependent Exemption Credit with No ID. For taxable years beginning on or after January 1, 2018, certain taxpayers claiming a dependent exemption credit for a dependent who is ineligible for a Social Security Number (SSN) or a federal Individual Taxpayer Identification Number (ITIN) may provide alternative information to the Franchise Tax Board (FTB) to identify the dependent and still qualify to claim the dependent exemption credit for California purposes. To claim the dependent exemption credit, taxpayers complete form FTB 3568, Alternative Identifying Information for the Dependent Exemption Credit.
Expansion for Credits Eligibility. For taxable years beginning on or after January 1, 2020, California expanded Earned Income Tax Credit (EITC) and Young Child Tax Credit (YCTC) eligibility to allow either the federal Individual Tax Identification Number (ITIN) or the Social Security Number (SSN) to be used by all eligible individuals, their spouses, and qualifying children.
Federal Acts. The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted on March 27, 2020, and the Setting Every Community Up for Retirement Enhancement (SECURE) Act was enacted on December 20, 2019. In general, California Revenue and Taxation Code (R&TC) does not conform to the changes under these federal acts. California taxpayers continue to follow the Internal Revenue Code (IRC) as of the specified date of January 1, 2015, with modifications. For specific adjustments due to the CARES Act and SECURE Act, see the Schedule CA (540) instructions.
CARES Act Loan Forgiveness. For taxable years beginning on or after January 1, 2020, California law provides an exclusion from gross income for covered loan amounts forgiven under the federal CARES Act, Paycheck Protection Program and Health Care Enhancement Act, or the Paycheck Protection Program Flexibility Act of 2020. Any credit or deduction allowed under this provision should be reduced by the amount of the exclusion allowed.
CARES Act Qualified Employer Plan Loans. For taxable years beginning on or after January 1, 2020, California conforms to the qualified employer plan loans provision under the federal CARES Act which temporarily increases the amount of loans allowable from a qualified employer plan to $100,000 for coronavirus-related relief and delays by one year the due date for any repayment for an outstanding loan from a qualified employer plan if requirements are met.
Small Business Hiring Credit. For the taxable year beginning on or after January 1, 2020, and before January 1, 2021, a small business hiring credit is available to a qualified small business employer that received a tentative credit reservation from the California Department of Tax and Fee Administration (CDTFA). For more information, get form FTB 3866, Small Business Hiring Credit.
Expansion for Credits Eligibility. For taxable years beginning on or after January 1, 2020, California expanded EITC and YCTC eligibility to allow either the federal Individual Tax Identification Number (ITIN) or the Social Security Number (SSN) to be used by all eligible individuals, their spouses, and qualifying children. If an ITIN is used, eligible individuals must provide identifying documents upon request of the Franchise Tax Board. Any valid SSN can be used, not only those that are valid for work. Additionally, upon receiving a valid SSN, the individual should notify the FTB in the time and manner prescribed by the FTB. The YCTC is available if the eligible individual or spouse has a qualifying child younger than six years old.
Worker Status: Employees and Independent Contractors. Some individuals may be classified as independent contractors for federal purposes and employees for California purposes, which may also cause changes in how their income and deductions are classified. For more information, see the instructions for Schedule CA (540).
Minimum Essential Coverage Individual Mandate. For taxable years beginning on or after January 1, 2020, California requires residents and their dependents to obtain and maintain qualified health care coverage. Individuals who fail to maintain qualifying health care coverage for any month during taxable year 2020 will be subject to a penalty unless they qualify for an exemption.
Net Operating Loss Suspension. For taxable years beginning on or after January 1, 2020, and before January 1, 2023, California has suspended the net operating loss (NOL) carryover deduction. Taxpayers may continue to compute and carryover an NOL during the suspension period. However, taxpayers with net business income or modified adjusted gross income of less than $1,000,000 or with disaster loss carryovers are not affected by the NOL suspension rules.
Excess Business Loss Limitation. The federal Coronavirus Aid, Relief, and CARES Act made amendments to IRC Section 461(l) by eliminating the excess business loss limitation of noncorporate taxpayers for taxable year 2020 and retroactively removing the limitation for taxable years 2018 and 2019. California does not conform. For taxable year 2020, complete form FTB 3461, California Limitation on Business Losses.
Program 3.0 California Motion Picture and Television Production Credit. For taxable years beginning on or after January 1, 2020, California R&TC Sections 17053.98 allows a third film credit, program 3.0, against tax. The credit is allocated and certified by the California Film Commission (CFC).
Business Credit Limitation. For taxable years beginning on or after January 1, 2020, and before January 1, 2023, there is a $5,000,000 limitation on the application of business credits for taxpayers. The total of all business credits including the carryover of any business credit for the taxable year may not reduce the net tax by more than $5,000,000.
Natural Heritage Preservation Credit. The Natural Heritage Preservation Credit expired on June 30, 2020. All qualified contributions must be made on or before that date.
New Donated Fresh Fruits or Vegetables Credit. For taxable years beginning on or after January 1, 2020, and before January 1, 2022, the list of qualified donation items has been expanded to include raw agricultural products and processed foods.
The California Franchise Tax Board has approved for filing all forms and schedules included in ProSeries/California.
IRS Electronic filing is available.
You can file returns electronically with this version of ProSeries/California.
PDF attachments are supported for electronic filing with California returns. As you create returns for electronic filing, ProSeries will automatically track attachments required to be submitted with the California e-file return. If you would like to attach some or all of these attachments as PDF files you can now access that option for the California return under the e-file menu (either from within the return or on the HomeBase when the return is highlighted). The Electronic PDF attachments section of the California Information Worksheet, Part VII keeps track of required attachments that have been attached as PDF.
For a list of forms that can be e-filed, go to What's New This Year in Help Center.
If you prepare more than 100 California income tax returns annually and prepare one or more using tax preparation software, California requires that you e-file all personal income tax returns.
The California Franchise Tax Board scans computer-generated forms to quickly process the income tax returns it receives. To meet the requirements for producing computer-generated forms, ProSeries is required to limit the width of the tax information printed on forms that are scanned. In certain cases, data you entered may be truncated. After completing a tax return, review the information that prints (for example, mailing address information), make any necessary changes, and reprint the return before mailing it.
To avoid delays in the processing of tax returns, the Franchise Tax Board requests that all mailed tax returns are printed single sided only. Duplex printed tax returns can increase the amount of time to process the return.The Franchise Tax Board requires that all text data be printed in capital letters for imaging purposes. This does not apply to worksheets or any other non-FTB form.
The California Franchise Tax Board requires ProSeries to print only one payment voucher per page to enable these forms to be read by an automated scanner.
End of ProSeries/California ReadMe file