540NR Tax Booklet 2019 Page 5
Native American Earned Income Exemption – For taxable years beginning on
or after January 1, 2018, federally recognized tribal members living in California
Indian country who earn income from any federally recognized California Indian
country are exempt from California taxation. This exemption applies only to
earned income. Enrolled tribal members who receive per capita income must
reside in their affiliated tribe’s Indian country to qualify for tax exempt status.
Additional information can be found in the instructions for the Schedule CA
(540NR) and form FTB 3504, Enrolled Tribal Member Certification.
IRC Section 965 Deferred Foreign Income – Under federal law, if you own
(directly or indirectly) certain foreign corporations, you may have to include on
your return certain deferred foreign income. California does not conform. For
more information, see the Schedule CA (540NR) instructions.
Global Intangible Low-Taxed Income (GILTI) Under IRC Section 951A – Under
federal law, if you are a U.S. shareholder of a controlled foreign corporation, you
must include your GILTI in your income. California does not conform. For more
information, see the Schedule CA (540NR) instructions.
Wrongful Incarceration Exclusion – California law conforms to federal law
excluding from gross income certain amounts received by wrongfully incarcerated
individuals for taxable years beginning before, on, or after January1,2018. If you
included income for wrongful incarceration in a prior taxable year, you can file an
amended California personal income tax return for that year. If the normal statute
of limitations has expired, you must file a claim by January1, 2019.
College Access Tax Credit – For taxable years beginning on and after
January1,2017, and before January 1, 2023, the College Access Tax Credit
(CATC) is available to entities awarded the credit from the California Educational
Facilities Authority (CEFA). The credit is 50% of the amount contributed by the
taxpayer for the taxable year to the College Access Tax Credit Fund. The amount
of the credit is allocated and certified by the CEFA. For more information, go to
the CEFA website at treasurer.ca.gov and search for catc.
Schedule X, California Explanation of Amended Return Changes – For taxable
years beginning on or after January 1, 2017, use Schedule X to determine any
additional amount you owe or refund due to you, and to provide reason(s) for
amending your previously filed income tax return. For additional information, see
“Instructions for Filing a 2019 Amended Return” on page 27.
Improper Withholding on Severance Paid to Veterans – The Combat-Injured
Veterans Tax Fairness Act of 2016 gives veterans who retired from the Armed
Forces for medical reasons additional time to claim a refund if they had taxes
improperly withheld from their severance pay. If you filed an amended return with
the IRS on this issue, you have two years to file your amended California return.
New Donated Fresh Fruits or Vegetables Credit – For taxable years beginning
on or after January 1, 2017 and before January 1, 2022, qualified taxpayers
may claim the New Donated Fresh Fruits or Vegetables Credit. This tax credit is
for donations of fresh fruits or vegetables made to California food banks. The
amount of the tax credit is 15% of the qualified value of the donated item, based
on weighted average wholesale price. The credit may be claimed only on a timely
filed original return. However, any credit not used in the taxable year may be
carried forward up to seven years. For more information, get form FTB 3814, New
Donated Fresh Fruits or Vegetables Credit.
Low-Income Housing Credit – Allocations to Partners – For partnerships owning
projects that receive a preliminary reservation of the Low-Income Housing Credit
(LIHC) before January 1, 2020, the prior law exception that requires a partnership
to allocate the credit among partners based upon the partnership agreement is
Sale of Credit – For projects that receive a preliminary reservation of the LIHC
beginning on or after January 1, 2016, and before January 1, 2020, a taxpayer
may make an irrevocable election in its application to the California Tax Credit
Allocation Committee to sell all or any portion of the LIHC allowed to one or
more unrelated parties for each taxable year in which the credit is allowed. An
original purchaser is allowed a one-time resale of that credit to one or more
unrelated parties. For more information, get form FTB 3521, Low-Income
Housing Credit, or go to the California Tax Credit Allocation Committee website at
California Achieving a Better Life Experience (ABLE) Program – For taxable
years beginning on or after January 1, 2016, the California Qualified ABLE
Program was established and California generally conforms to the federal income
tax treatment of ABLE accounts. This program was established to help blind or
disabled U.S. residents save money in a tax-favored ABLE account to maintain
health, independence, and quality of life. Additional information can be found in
the instructions of form FTB 3805P, Additional Taxes on Qualified Plans (Including
IRAs) and Other Tax-Favored Accounts.
New California Motion Picture and Television Production Credit – For taxable
years beginning on or after January 1, 2016, a new California motion picture and
television production credit will be allowed to a qualified taxpayer. The credit is
allocated and certified by the California Film Commission (CFC). The qualified
• Offset the credit against income tax liability.
• Sell the credit to an unrelated party (independent films only).
• Assign the credit to an affiliated corporation.
• Apply the credit against qualified sales and use taxes.
For more information, get form FTB 3541, California Motion Picture and
Television Production Credit, form FTB 3551, Sale of Credit Attributable to an
Independent Film, go to ftb.ca.gov and search for motion picture, or go to the
CFC website at lm.ca.gov and search for incentives.
Electronic Funds Withdrawal (EFW) – Make extension or estimated tax payments
using tax preparation software. Check with your software provider to determine if
they support EFW for extension or estimated tax payments.
Payments and Credits Applied to Use Tax – For taxable years beginning on or
after January 1, 2015, if a taxpayer includes use tax on their personal income tax
return, payments and credits will be applied to use tax first, then towards income
tax, interest, and penalties. Additional information can be found in the instructions
for California Form 540.
Dependent Social Security Number (SSN) – Taxpayers claiming an exemption
credit must write each dependent’s SSN in the spaces provided within line 10 for
California Form 540NR.
Financial Incentive for Seismic Improvement – Taxpayers can exclude from
gross income any amount received as loan forgiveness, grant, credit, rebate,
voucher, or other financial incentive issued by the California Residential Mitigation
Program or the California Earthquake Authority to assist a residential property
owner or occupant with expenses paid, or obligations incurred, for earthquake
loss mitigation. Additional information can be found in the instructions for
California Schedule CA (540NR).
Natural Heritage Preservation Credit – For qualified contributions made on or
after January 1, 2015, the credit carryover period has been extended to 15 years
or until exhausted, whichever occurs first. Any unused credits remaining before
January 1, 2015, will remain subject to an eight-year carryover provision. In
addition, the period for when a qualified contribution is made, for which a tax
credit will be allowed, has been extended to June 30, 2020.
Disaster Losses – For taxable years beginning on or after January 1, 2014,
and before January 1, 2024, taxpayers may deduct a disaster loss for any loss
sustained in any city, county, or city and county in California that is proclaimed
by the Governor to be in a state of emergency. For these Governor-only declared
disasters, subsequent state legislation is not required to activate the disaster loss
provisions. Additional information can be found in the instructions for California
form FTB 3805V, Net Operating Loss (NOL) Computation and NOL Disaster Loss
Limitations – Individuals, Estates, and Trusts.
Head of Household – California requires taxpayers who use head of household
(HOH) filing status to file form FTB 3532, Head of Household Filing Status
Schedule, to report how the HOH filing status was determined.
New Employment Credit – For taxable years beginning on or after January1,
2014, and before January 1, 2021, the New Employment Credit (NEC) is
available to a qualified taxpayer that hires a qualified full-time employee on or
after January1, 2014, and pays or incurs qualified wages attributable to work
performed by the qualified full-time employee in a designated census tract or
economic development area, and receives a tentative credit reservation for that
qualified full-time employee. In addition, an annual certication of employment
is required with respect to each qualified full-time employee hired in a previous
taxable year. In order to be allowed a credit, the qualified taxpayer must have a
net increase in the total number of full-time employees in California. Any credits
not used in the taxable year may be carried forward up to five years. If a qualified
employee is terminated within the first 36 months after beginning employment,
the employer may be required to recapture previously taken credits. For more
information, go to ftb.ca.gov and search for nec or get form FTB 3554, New
Repeal of Geographically Targeted Economic Development Area Tax Incentives
The California legislature repealed and made changes to all of the Geographically
Targeted Economic Development Area (G-TEDA) Tax Incentives. Enterprise Zones
(EZ) and Local Agency Military Base Recovery Areas (LAMBRA) were repealed on
January 1, 2014. The Targeted Tax Areas (TTA) and Manufacturing Enhancement
Areas (MEA) both expired on December 31, 2012. For more information, get the
applicable EDA booklet.
California Competes Tax Credit – For taxable years beginning on and after
January1, 2014, and before January 1, 2030, the California Competes Tax Credit
is available to businesses that want to come to California or stay and grow in
California. Tax credit agreements will be negotiated by the Governor’s Office of
Business and Economic Development (GO-Biz) and approved by the California
Competes Tax Credit Committee. The California Competes Tax Credit only applies
to state income or franchise tax. Taxpayers who are awarded a contract by the
committee will claim the credit on their income or franchise tax returns using credit
code 233. The credit can reduce tax below the tentative minimum tax. Any credits
not used in the taxable year may be carried forward up to six years. For more