Believe it or not, tax time is upon us once again in the state of California. While the federal IRS won't be taking 2013 income tax returns for about three weeks, the state Franchise Tax Board is now accepting them and officials are urging California residents to file right away in order to get a speedy refund.
According to a Franchise Board spokesperson, there will be two ways to file state personal income tax returns this year: the Form 540 (also known as the Long Form) and the Form 540 2EZ (for individuals with simple tax situations and no itemized deductions.)
It is expected that most Californians will file their state tax returns electronically this year, though mailing in paper returns is still possible. The Franchise Board spokesperson said that 83 percent of returns were filed electronically last year, and this year the state hopes the number will be even higher.
While some people might worry about the security of e-filing, the Franchise Board spokesperson said the system is like an onion with "layers upon layers of protection," including firewalls, encryption and other security features. The hope is that one day everyone will file electronically, the spokesperson said.
The Franchise Board spokesperson also discussed some changes that apply to this year's tax season:
The 540a tax form has been discontinued.
The exemption for mortgage-related "forgiven debt" expired last year. However, the IRS announced in September that California taxpayers who sold their principal residence in a short sale for less than what was owed on the mortgage do not have to include any forgiven or canceled mortgage debt from their taxable income.
There are 18 charities now available for a "check-off donation" on state tax returns (for people who want to do some last-minute tax planning). New to the list of charities this year are the American Red Cross, Keep Arts in School and Protect our Coast and Oceans.
Undoubtedly, tax planning can be complicated and confusing, and the stakes are high as nobody wants to lose money or get into trouble with the state or IRS. That's why many people in California turn to an experienced tax attorney for sound legal advice before filing their tax returns.
Source: Sacramento Bee, "Q&A: It’s official: California’s tax-filing season is open," Claudia Buck, Jan. 13, 2014