CA Tax Law Specialist key terms

The schedule where a taxpayer starts with federal adjusted gross income and adds or subtracts items California treats differently, such as state income tax refunds, HSA deductions, or depreciation differences, to arrive at California adjusted gross income.

The California starting measure of income computed by modifying federal adjusted gross income for state-specific differences. It drives most individual deductions and credits and determines eligibility for many California programs and exemptions.

A California limitation that reduces certain itemized deductions, such as charitable contributions and mortgage interest, once a taxpayer's adjusted gross income exceeds a threshold, with the reduction capped at a percentage of the deductions claimed.

California generally allows interest on up to one million dollars of acquisition debt on up to two residences, a different limit from federal law; home equity interest treatment also diverges, so federal and state returns often differ here.

California's marital property system under which income earned and property acquired during marriage is owned equally by both spouses. It affects how income, deductions, and basis are reported on separate and joint returns.

A person in a state-registered relationship who, for California income tax purposes, is generally treated like a spouse, including combined reporting of community income and eligibility for certain credits and deductions.

The choice of how a married couple or registered domestic partners report income. California allows a combined return using married-filing-jointly rates, or separate returns that must divide community property consistently.

A refundable credit for low-income working Californians based on earned income and dependent count. It can be claimed even by filers with no tax liability and is coordinated with, but separate from, the federal earned income credit.

A tax credit that can reduce tax below zero and generate a payment to the taxpayer. California has several, including the earned income credit and young child credit, which differ from nonrefundable credits that only offset tax owed.

The mechanism allowing unused nonrefundable credits to be applied in later years when tax liability exists. California sets specific carryover periods and ordering rules for each credit, so documentation of the source year matters.

A California rule permitting a business loss to offset income in future years, with state-specific suspension and carryback limitations that can differ from federal treatment, especially for higher-income taxpayers during suspension years.

The choice of how a business entity is taxed, such as partnership, S corporation, or disregarded entity. California generally follows the federal election but imposes its own rules, fees, and filing obligations.

California imposes a franchise tax on S corporations measured by net income, plus a reduced rate on the entity level, while shareholders report their share of income. The state also applies a minimum annual tax.

The lowest annual tax a corporation or other taxable entity owes California regardless of income, with higher amounts for certain entities. It is due even in loss years and is not a substitute for tax measured on income.

An annual charge California imposes on limited liability companies based on total income, separate from the minimum franchise tax. The fee scales with income tiers and applies to both in-state and registered out-of-state LLCs.

The test determining whether an out-of-state entity has sufficient contacts with California to be subject to its franchise or income tax, based on factors such as sales, property, payroll, or active solicitation in the state.

The formula a multistate business uses to divide its income among states that tax it. California uses a single sales factor for most taxpayers, so the share of California sales largely determines the taxable portion.

California's method for assigning sales of services and intangibles to the state based on where the customer receives the benefit, rather than where the seller performs the work, which shifts apportionment toward customer locations.

A registration issued by the California Department of Tax and Fee Administration allowing a retailer to collect and remit sales tax. Retailers must display it and report tax by the assigned filing frequency.

A sale of tangible personal property to a consumer for use rather than resale. It triggers sales tax, while sales for resale supported by a valid resale certificate are exempt from the tax at that stage.

A tax on the storage, use, or consumption of tangible personal property in California when sales tax was not collected, such as out-of-state purchases. It complements sales tax and is often owed by the buyer.

A document by which a purchaser tells a seller that property is bought for resale, relieving the seller of tax collection. California requires specific elements, and misuse can make the purchaser liable for tax.

An entity that facilitates sales through an online or physical marketplace and is required to register, collect, and remit California tax on those sales, shifting collection duties away from individual sellers on the platform.

The connection between a seller and California that permits the state to require tax collection. It can arise from physical presence or economic thresholds based on sales volume or transaction counts.

A California constitutional amendment limiting property tax to one percent of assessed value, capping annual increases for retained property, and restricting reassessment to a change in ownership or new construction.

The assessed value established when property is purchased or newly constructed, which serves as the starting point for annual inflation adjustments under Proposition 13. It resets upon a reassessable change in ownership.

A transfer of a present interest in real property that triggers reassessment at current market value. Certain transfers, such as between spouses or qualifying parent-child transfers, are excluded or excluded by exclusion.

A separate property tax bill issued when property is reassessed midyear, covering the difference between old and new values for the remainder of the fiscal year and often the following year.

The periodic remittance of withheld income tax and employment taxes to the state, due on a schedule set by the Employment Development Department based on the employer's deposit history and liability size.

A California wage-replacement program funded by employee payroll contributions, providing benefits for non-work injuries and paid family leave. Contributions are withheld from wages up to an annual cap.

The quarterly filing that reports wages, withholding, and contributions for California employment taxes. It reconciles deposits made during the quarter and identifies worker classifications and wage amounts.

The determination of whether a worker is an employee or independent contractor. California applies a strict test emphasizing the hiring entity's control and the worker's independent business, with penalties for misclassification.

A formal written challenge to a tax assessment or denial issued by a California tax agency, filed within the deadline and stating the grounds. It preserves the taxpayer's right to further review.

An informal meeting with the Office of Tax Appeals or agency appeals staff where the taxpayer and representative present arguments and evidence before an administrative decision is issued.

An official within California's Office of Tax Appeals who hears disputed tax matters, evaluates evidence and legal arguments, and issues a written decision subject to further review.

An agreement allowing a taxpayer to settle a tax debt for less than the full amount owed, based on doubt as to liability or collectibility, subject to agency approval and compliance conditions.

A payment plan permitting a taxpayer to pay an outstanding balance over time. California sets eligibility rules, interest continues to accrue, and default can revive collection action.

The date on which California's tax law is tied to the Internal Revenue Code. Changes Congress enacts after that date generally do not apply unless the Legislature adopts them, creating federal-state differences.

A deliberate legislative choice for California to depart from a federal tax rule, such as bonus depreciation or certain deduction limits, so state taxable income differs from the federal computation.

The place a person intends as home, which determines full California tax liability on worldwide income. Nonresidents are taxed only on California-source income, and part-year residents prorate by residency periods.

Federal regulations governing practice before the Internal Revenue Service, covering competence, conflicts of interest, and written advice standards. California preparers are also bound by state ethical and licensing rules.

Sanctions imposed on tax return preparers for positions that lack substantial authority or for willful or reckless conduct. California imposes its own preparer penalties in addition to federal consequences.

A person authorized to act for a taxpayer before a taxing agency, typically through a power of attorney. The representative must meet qualification and ethical standards and protect client confidentiality.