CA Individual Question

[Kram BergGold]

In 2012, a 21 year old, full time college student paid his college expenses from his accounts. Therefore, he was not his parents dependent on his taxes both Federal and CA and I gave him the exemption on both returns. He was subject to a small CA tax of $147 and some CA AMT of $311. When CA processed his return,they disallowed his personal exemption credit so hios tax went from $43 to $147. Is there a reason for this or did the FTB make a mistake?

[Roland Slugg]

Is there a reason for this or did the FTB make a mistake?

Isn't there another possibility?

It's impossible to offer meaningful assistance without seeing the return ... as well as the parents' return. I can only suggest that you read the letter or notice from the FTB explaining the change(s).

I'm wondering about that $311 of AMT. How did that happen?

[Kram BergGold]

Kiddie Tax

I believe the AMT was caused because the child was subject to Kiddie Tax.

[Roland Slugg]

I believe the AMT was caused because the child was subject to Kiddie Tax.

You sure about that? The "Kiddie Tax" is figured on form FTB 3800, whereas the AMT is figured on Schedule P (Form 540), and the two taxes go on different lines of the California return.

Furthermore, the Kiddie Tax only applies for children who are claimed as dependents on their parents' return. You said this particular 21-yo filed his own return and was not claimed as a dependent on his parents' return because they fail the support test.

You might wish to consider having both returns ... i.e. the 21-yo student's and the parents', if you have it ... reviewed by someone with more experience with California taxes.

[S T]

Kram, I agree with Roland Slugg on the points he addressed to your original post.

If in fact you filed the College Child on his own, and the parents did not claim him as a dependent,

The California return I do not believe should not have had the FTB 3800 form attached. Here is an excerpt from FTB News 2012, as well as the link https://www.ftb.ca.gov/professionals...ugust_2012.pdf

If the child has earned income that exceeds over half of their support, the Kiddie Tax is not applicable. It is possible however, that your software may still suggest that a Form 3800 be attached to the child’s return. Filing a Form 3800 on a tax return where the child claims a personal exemption may lead us to believe the child can be claimed as a dependent by another person. A notice would then be issued by us denying the child’s personal exemption.
In general, for taxable years beginning on or after January 1, 2010, California law conforms to the Internal Revenue Code (IRC) as of January 1, 2009. For federal Kiddie Tax rules, see IRC Section 1(g).
Tax News

It is rare that Calif returns filed ever have an AMT

Hope this assists you - you can private email me if you need more guidance on "protests" for Cali FTB "presumed/assumptive" changes.

Sandy