The Lowdown on California Tax Credits and Deductions

It’s a new year and the tax season will be rolling around quickly. Soon we will be looking at the tax man deadline and rushing to the post office to turn in our yearly forms in hopes of obtaining the highest federal and state tax refund that we can get. To help you keep your money, I’ve offered the lowdown on several California Tax credits.

The major changes in tax credits deal with childcare, disasters in California and the teachers in California.

California Sea Otter Fund

Anyone who has been donating financial funds to the California Sea Otter Fund can now report them on their taxes. Additional information on the California Sea Otter Fund and other voluntary donations can be found at http://www.ftb.ca.gov/apps/vita/Catalog/contributionFunds.pdf

Northern California Rain Storms
If you were a victim of the Northern California Rain Storms that happened between December 2005 – January 2006 and March 2006 – April 2006, you will be able to obtain assistance through your tax return.

Under California Franchise Tax Board publication 1034A victims can claim a loss on property that is not covered by insurance or has not been reimbursed in another form or fashion. Disaster losses can be filed on Internal Revenue Service form 4684, Section A – Casualties and Thefts.

San Bernadino Wildfires
If you are were a victim of the San Bernadino wildfires in July of 2006, your property damage can also be declared on Internal Revenue Service form 4684 Section A – Casualties and Thefts.

Businesses who have suffered losses due to the Northern California Rain Storms or the San Bernadino Wildfires should obtain Internal Revenue Service form 4684, Section B.

Employer Child Care Credit
The Employer Childcare Credit is a state tax credit for business that spend money starting up a childcare for their employees or for a person who leases office space for a childcare. A business can also obtain this tax credit if they notify their employees of childcare vacancies at local childcare centers.

In 2006 this tax credit has been extended to the year of January 1, 2012.

Community Development Financial Institution Credit
On September 28^th, 2006 The Franchise Tax Board amended several increases to the Community Development Financial Institution Credit.

This tax credit has been extended till January 1, 2012. The FTB set a limit of investment to 10 million dollars.

The Community Development Financial Institution Credit is a business that provides credit, financial services, and other services to underserved markets or populations. community development credit unions, community development banks community development loan fund (including microloan funds), or community development venture capital companies are all forms of CDFI’s

Teachers Retention Credit
The Teachers Retention Credit is a credit for teachers who teach kindergarten up to 12th grade. Teachers are able to receive a tax credit up to $1500 depending on how many years they have worked as a teacher. Unfortunately this credit has been suspended by the Franchise Tax Board.

Domestic Partners
Lesbian and Gay Domestic Partners now have a new filing status in California. Domestic Partners can now file “Married and filing jointly” and “married filing separate”. Please contact the Franchise Tax Board or your tax professional for details since the Franchise Tax Board is currently implementing it into the new tax season.

As always obtain your tax information from a professional and be sure to read all the documentation that the Franchise Tax Board of California provides. Companies like Taxmasters, Hewellet Jackson, H & R Block will be more than happy to sit down and answer all your tax questions.

You can also call the Franchise Tax Board by phone Monday through Friday, year round from 7am till 6pm. If you are within California, you can call toll free at (800) 852-5711. If you are outside California, calls can be made to (916) 845-6500

Reference:

• www.ftb.ca.gov/apps/vita/Catalog/contributionFunds.pdf