Category Archives: California Tax Changes

Estate Planning Changes : What 2015 Looks Like

Blank provides insight to Estate Planning for 2015.

The consensus at 48th Annual Heckerling Institute on Estate Planning was that because 2014 is an election year, there’s unlikely to be any major tax reform this year. The year 2015, however, could be a different story.

Continue reading

Nonprofit Organizations Conducting Campaign Activity


Back on December 31 our post on What You Need to Know about NFP 501(c)(4) organizations outlined the changes, including a new definition in 501(c)(4) social welfare organizations.

Beginning January 1, 2014 the Government Code relating to campaign activity was amended to add reporting requirements for “reporting nonprofit organizations” that engage in campaign activity.

Government Code Section 54964.6 was added to require reporting nonprofit organizations – that engage in political activity – of specific amounts to:

  • File FTB 3589 with CA FTB and post on the nonprofit’s Internet website the identity and amount of each specific source or sources of funds it receives for campaign activity. (As of this posting, Form FTB 3589 is not available, and will not be available until 2015.  You should contact your tax professional or the Franchise Tax Board.)
  • Deposit into a separate bank account all “specific source or sources of funds” it receives.
  • Pay for all campaign activity from that separate bank account.
  • Provide a description of the campaign activity.
  • Report the identity and amount of payments the organization makes from the required separate bank account.


Medical and Dental Expense Deduction – FTB CA


FTB CAFederal changed the allowable medical and dental expense deduction amount for federal purposes. A deduction is allowed for unreimbursed allowable medical and dental expenses that exceed 10 percent of federal adjusted gross income (AGI) California allows a deduction for medical and dental expenses that exceed 7.5 percent of federal AGI. For more information, go to and search for Schedule CA 540.

TRANSLATION:  If you have medical and dental expenses that exceed the 7.5% threshold in California, you will be able to claim these expenses under California Tax Law even if you don’t have enough  to meet the 10% federal threshold.

Tax information is not tax advice.  If you need your questions answered, call 619-589-8680 for an appointment.  Pat Michael and his team at  is your best source for professional tax preparation services with more than 30 years experience and thousands of satisfied clients.

Personal Tax Preparation   Business Tax Preparation   Partnership Tax Preparation  Corporate Tax Preparation  Incorporation-Choice of Entity   Business Support Services  Corporate Compliance   Audit Representation  Retirement Tax Planning   Wills & Trusts   Estate Planning   Bookkeeping   Payroll

Flash – 2013 Short Sellers Get State Tax Relief


Franchise Tax Board, State of CAFranchise Tax Board of California 

We updated our website to include information about mortgage debt relief for taxpayers who sold their principal residences through a short sale in 2013.

According to an Internal Revenue Service (IRS) Information Letter dated September 19, 2013, the IRS determined that California taxpayers who sell their principal residences for less than what is owed on the home as part of a short sale, in which the lender agreed to the short sale, do not incur cancellation of indebtedness income. Instead, the amount of forgiven debt is included in the amount realized in determining gain on the sale of that residence.

The IRS guidance is limited to California short sales only. The IRS guidance did not specifically address other types of real estate transactions such as non-judicial foreclosures and mortgage loan modifications.

We will update information and FAQs on our website soon. For more details and updates, please go to and search for mortgage forgiveness debt relief.


Pat Michael and his team at US-TaxLaws is your best source for professional tax preparation services with more than 30 years experience and thousands of satisfied clients.
Personal Tax Preparation   Business Tax Preparation   Partnership Tax Preparation
Corporate Tax Preparation   Incorporation-Choice of Entity    Business Support Services    Corporate Compliance    Audit Representation   Retirement Tax Planning   Wills & Trusts   Estate Planning   Bookkeeping   Payroll 

One Million+ getting a letter from the Franchise Tax Board!

uh oh signMore than 1 million Californians did not file a 2012 state income tax return!

Sacramento – Last year, the FTB collected more than $727 million dollars through their diligent campaign to find people who did not file!

The FTB receives more than 400 million income records from bank, employers, state departments, the IRS and other sources.

This program is designed to find wage earners and self-employed who did not file – it also tracks down other nonfilers through sources such as occupational licenses and mortgage interest payments.

If contacted,  you have 30 days to file or to show why one isn’t due.  For those who do not respond, the FTB will issue a tax assessment using income records to estimate the amount of state tax due.  It will include interest, fees and penalties.  If you get a letter, contact us immediately.  Do not wait.  Do not hesitate.  Call us at 619-589-8680.

The FTB administers two of CA’s major tax programs – Personal Income Tax and Corporation Tax.  They take their job seriously and are responsible for collecting more than 65% of California’s general fund.  For more information visit

Tax information is not tax advice.  Always speak with your tax professional before making decisions.  If you need to speak with a tax professional, give us a call today at 619-589-868.



90,000 CA Businesses late on filing returns

State Contacting Businesses to File Last Year’s Tax Returns

Sacramento – Franchise Tax Board (FTB) is contacting more than 90,000 California business entities that have not filed their 2011 state income tax returns. Continue reading

Want to cut your spouse’s tax cost of inherited IRA’s?

Use Estate Planning to protect your IRAs!

This post speaks to the IRA owner in planning the future, and how essential it is to plan your estate today.  Put bluntly, To get your estate situation the way you want it at death, you need to do your estate planning at the same time you build your asset portfolio.  If you wait until you have built them, estate planning is much more difficult¹.”    Continue reading

Attention California Business and Schedule C Taxpayers

Do you know about California’s City Business Tax Program?You may be getting a notice from your city.  The FTB and cities are looking for revenue and the newest participants are Downey, Escondido, Fresno, Salinas, Santa Maria, and Tustin.

According to Spidell’s “…in June, cities were reminded to transmit 2012 business license information to the FTB on or before June 30.”  For more information on the City Business Tax Program, click here.

“From this information, the FTB will send filing enforcement notices to self-employed individuals and other businesses that have failed to file a return.

Cities happily send this information in exchange for a list of businesses that have filed tax returns. The cities use this information to contact the business and assess fees, penalties, and interest for failing to file and pay for a city business license. The FTB sends the data to the cities in December of each year.”

Each city has different requirements as to who must have a license.

For a pdf of participating cities, click here


Source:  Spidell’s July 2013 California Taxletter


UPDATE: Fire Fee & State Responsibility Area Map Changes

Are You Affected by the State Responsibility Area Maps Update? Homeowners statewide will no longer receive refunds.

Back on May 28, we wrote that the Court ruled the $150 Fire Prevention Fee assessed by the California State Board of Equalization (BOE) against each structure in a “state responsibility area” is no longer deductible as a tax under IRC §164. Continue reading

UPDATE : California Offset Program Expands

California To Collect Debts From Out-Of-State Residents

The California offset program has been expanded to allow reciprocal agreements for California to collect debts from out-of-state residents. The Delinquent Taxpayer Accountability Act added Revenue and Taxation Code Section 19377.5, granting the Franchise Tax Board (FTB) the authority to enter into reciprocal agreements with other states to offset refunds to pay personal income tax (PIT) debts owed to the partner state. Continue reading

Federal Income Tax Changes Summary for 2012

The Franchise Tax Board of California has provided their report of the Federal Income Tax Changes Summary for 2012.  60 pages of changes.  The FTB 2012 summary explains new federal laws, along with the effective dates, and the corresponding California law, if any. It includes an explanation of any changes made in response to the new federal law, and the impact on California revenue if California conforms to the federal changes.

New information return for some like-kind exchanges (06-17-13)

Beginning January 1, 2014, taxpayers who complete a like-kind exchange of California property for property located out-of-state will be required to file an information return with the FTB. (New R&TC §§18032, 24953 added by AB 92)

The information return must be filed for the year in which the exchange is completed and each subsequent year that the gain or loss is deferred. If the taxpayer fails to file an information return, and a required tax return is not filed, the FTB may estimate net income and assess tax, interest, and penalties.

For the full text of the bill, go to:

Six Facts on Tax Refunds and Offsets

IRS Tax Tip 2013-60, April 22, 2013

Certain financial debts from your past may affect your current federal tax refund. The law allows the use of part or all of your federal tax refund to pay other federal or state debts that you owe.

Here are six facts from the IRS that you should know about tax refund ‘offsets’. Continue reading

Fire Prevention Fee Ruled Not Tax Deductible

The IRS Office of Chief Counsel issued a determination on the subject of the Fire Prevention Fee, which many Californians are subject to. The Court ruled that the $150 Fire Prevention Fee assessed by the California State Board of Equalization (BOE) against each structure in a “state responsibility area” is not deductible as a tax under IRC §164. For details, see Chief Counsel Advice 201310029.

A “state responsibility area” is defined as an area of the state “in which the financial responsibility of preventing and suppressing fires has been determined by the [Board of Forestry and Fire Protection]… to be primarily the responsibility of the state.” Cal. Pub. Res. Code §4102.