California ~ Personal Income Tax: Update Provided on Nonconformity to Self-Employment Tax Deduction

The California Franchise Tax Board (FTB) has announced that self-employed taxpayers who have already filed a California personal income tax return for 2011 using the higher federal self-employment tax deduction rate do not need to file an amended California return. This is a change from the FTB’s original guidance, which stated that previously filed returns had to be amended. As previously reported, California does not conform to the increased federal deduction percentage for 2011 and 2012. (TAXDAY, 2012/03/01, S.4)

In order to reduce taxpayer burdens, the FTB is sending a letter to a limited number of taxpayers based on available information and considering the time and effort involved to revise the deduction. The letter will include an explanation of the issue, proposed corrected amounts, and allow taxpayers to respond before the FTB issues a tax bill. Taxpayers who have already filed and are not contacted by FTB do not need to file an amended return.

The majority of self-employed taxpayers have not yet filed their 2011 tax returns. The FTB has updated its forms and instructions and contacted all software companies to make the update for the Schedule CA, line 27 adjustment.

Announcement, California Franchise Tax Board, March 2, 2012


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