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Taxpayers in California are aware that they must work with multiple government agencies to satisfy all aspects of their income and other tax obligations. Aside from handling one’s federal income tax and other obligations with the IRS, a taxpayer is also likely to have state tax obligations to address. One of the most common of these obligations is the California state income tax administered by the Franchise Tax Board. Unfortunately, since both the IRS and state tax agencies will share information, the failure to handle either tax obligation frequently results in subsequent tax problems. 

At NewPoint Law Group, our Sacramento tax attorneys are dedicated to providing dependable, strategic solutions to tax concerns. If you are worried about past unfiled taxes, unpaid taxes, unreported foreign accounts, or other tax mistakes, our legal team may be able to help. To schedule a confidential consultation with a tax lawyer serving Folsom, Roseville, and Sacramento call 1-800-358-0305 or contact us online today.

What Taxes Are the California FTB Responsible for Collecting?

The Franchise Tax Board is one of the major state-based tax collection, enforcement, and administrative agencies in the State of California. The California FTB is responsible for administering an array of tax programs including:

  • City Business Tax Program –  The FTB exchanges tax data with multiple cities in California. Obtaining and analyzing this data helps the agency identify and prosecute self-employed individuals who fail to file and pay income tax along with businesses that may have neglected local tax filing requirements.
  • Criminal Tax Investigations — Criminal Investigation Bureau is part of the FTB that investigates all credible reports of tax and other related fraud in California.
  • Personal Income and Corporate Tax Administration – The FTB is the state agency responsible for running California’s personal and corporate income taxes. These state income taxes are independent of one’s obligation to pay federal income tax.
  • California Voluntary Disclosure Program – Taxpayers in California who have made mistakes regarding state-based tax obligations may voluntarily disclose their error. If the disclosure is legally sufficient, FTB may waive penalties and fines that have been imposed.

The above sets forth some of the routine activities handled by the FTB. Other aspects of the FTB’s day-to-day operations concern collection of court-ordered debts, administering the Financial Institution Record Match (FIRM) Program, and other activities.

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What Are the Income Tax Rates, Tax Deductions, and State Tax Credits for the 2016 Filing?

As part of the agency’s responsibility for administering the tax system, California’s FTB regularly makes announcements regarding important changes to tax rules and other aspects of the system. Recently, the FTB announced an assortment of tax information including adjusted tax filing thresholds, tax deductions, tax credits, and other pertinent information. These updated numbers are based on the rate of inflation in the state. Essentially, tax brackets are “indexed” annually on the basis of the California Consumer Price Index (CPI). For the transition from the 2015 tax year to the 2016 tax year, certain items have been adjusted by the inflation rate of 2.1 percent as measured by the California CPI for all urban consumers from June 2015 to June 2016.

What this means for taxpayers is that they should determine whether they are required to file state taxes under the new filing threshold. As an example, taxpayers who have not yet reached the age of 65 are not required to file a state tax return unless their income is greater than $13,278 for the 2016 tax year. However, it is essential to note that individuals earning less than this amount may still want to file because filing your taxes is the only way to claim a state Earned Income Tax Credit (Cal EITC).

Other changes to important tax items include an increase to the standard deduction available for all taxpayers. The standard deduction for single or married-filing-separate taxpayers increased from $4,044 in 2015, to $4,129 in 2016. Changes to numbers for the 2016 filing season also include increases to Personal exemption credit and dependent exemption credits. Individuals who rent their home or apartment may also benefit from an increase in the available renter’s credit. Other tax credits affected by indexing include the Joint Custody Head of Household Credit, Dependent Parent Credit, and Qualified Senior Head of Household Credit.

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Contact a Tax Lawyer in Sacramento for Questions About California Income Taxes

If you have questions regarding the 2016 California tax rates and exemptions, the FTB has prepared a comprehensive guide.  However, sifting through pages of tax figures, rules, and regulations are rarely activities that most tax laypeople are comfortable handling. NewPoint Law Group can handle these concerns while providing peace of mind. To schedule a confidential tax consultation or look for more information on our tax attorneys addressing the IRS and California Franchise Tax Board Garishments, call 1-800-358-0305 or contact us online today.