Need help with CA return

[oceanlovin'ea]

I have a client who is a resident of Florida that married a CA resident in Nov 2005. How do I file the CA return?

From what I read on the CA instructions it says if one party is a non resident then you file the NR return. Is this correct?

Do I have to divide up the income and expenses for each? The instructions says CA is a community property state and all income is divided between the 2 people.

He did some SE work in CA but had a loss.

They put $5000 each in IRA. Is that not allowed in CA?

Thanks for the help.

Linda F

[S T]

Calif has an allocation

You start with Fed AGI, during your input in your software you determine what is taxable to California.

It is more complicated in your case as it seems the spouse was a Calif resident, but he was not.

Here is a link that has some really good examples that might assist you in determing how to report to Calif. http://www.ftb.ca.gov/forms/06_forms/06_1031.pdf

Sandy

[jainen]

Don't worry

>>CA is a community property state and all income is divided between the 2 people<<

Don't worry. Community property laws don't apply unless he moved to California after the wedding.

If they file MFS then the wife will use the regular resident form and not allocate anything for the out-of-state spouse. If they file joint on federal then they must also file joint on the state, using Form 540-NR. On the adjustments page (Form CA (Form 540NR)) include all the federal income (his as well as hers) in column A. Column B and C are for differences in tax LAW, not the source of income. For example, California doesn't tax unemployment insurance so it is subtracted out. Column E is for the California source items, including his Schedule C loss.

California conforms completely to federal rules for IRA contributions. That means you do not add his adjustment back in to colums B/C/D, just don't include it in column E unless it is based on California source wages.

You can't efile California unless you are registered to do so. That is easy to arrange using your federal EFIN, but you don't need to bother if this is your only California return. California has an automatic, paperless extension, but of course payment is still due on time. Many of the California forms say the due date is April 16, but it is actually the 17th this year.

[oceanlovin'ea]

Thanks

for all your suggestions. I am already set up to efile in California. I did that last year.

I took out his social security that was taxable and the rental loss from their second home in Arizona, but left everything else on the CA return.

They had a large Schedule A and so ended up with no taxable income and a full refund on the federal and the state.

I also filed the Arizona state because of their rental property there.

People are so strange. They don't realize how complicated their returns really are because we make it look so easy. You know the kind - "I didn't work very much because I retired last year, but I still have my office in Florida and my travel expenses for the work I did in California. Oh, my wife sold her home. What do you need to know? All the papers are packed in boxes in the storage unit" "I don't think we made any money on the rental in Arizona." So 2 state returns, a schedule C, sale of personal residence because it was over $250,000 profit, Schedule A deductions.

But we love em anyway, don't we?

Thanks Linda F

[erchess]

This seems like a good place to ask

a question. I am an EA. I would like to be able to file a CA return but I am under the impression that I have to get permission from CA before I can sign a CA return as paid preparer. Is that right, and if so, how do I go about it? Also, how do I go about getting permission to e-file to CA?

[S T]

Calif efile

Here is the link to what the Calif efile program requires http://www.ftb.ca.gov/online/8633/index.asp

Sandy

[oceanlovin'ea]

Very simple and quick

Last year I realized with about 2 days left to file that I need to file a CA return.I went to the website that Sandy mentioned and filled out the information. I think I faxed it in and the next day I had approval.

So don't worry. It not hard to do.

Linda F