Franchise Tax Board offers its filing tips

Tax season has kicked off at the Franchise Tax Board and with it a list of important updates and reminders for California taxpayers.

“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,” State Controller and FTB Chair Betty T. Yee said. “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. Betty said she hopes 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.” she said. “We encourage people to file as early as possible and check their eligibility for each tax credit to get the full refund they deserve.”

There is free help with tax returns and a list of the Volunteer Income Tax Assistance program locations throughout California at the Franchise Tax Board’s website, ftb.ca.gov.

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 on a first-come, first-served basis until the credits are exhausted. CDTFA will accept applications for a tentative credit reservation through today (Jan. 15).

New this year, CalEITC eligibility expands to taxpayers with an Individual Taxpayer Identification Number. 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. These cash-back state tax credits can lower the amount of tax owed or put money back into the pockets of California workers.

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. It is still possible to obtain health coverage and financial help at CoveredCA.com. It is crucial to get health coverage now to avoid a penalty in 2022.

FTB encourages taxpayers to beware of scams and 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 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.

FTB’s MyFTB service allows users to view their tax documents.