Instructions For Schedule Ca (540) - State Of California Franchise Tax Board (Page 5 of 7) in pdf

California also has a different phase-out deduction amount. If you

Original issue discount (OID) for debt instruments issued in 1985 and

claimed the student loan interest deduction on your federal return,

1986. In the year of sale or other disposition, you must recognize the

complete the worksheet to compute the amount to enter on line 26,

difference between the amount reported on your federal return and the

column B.

amount reported for California purposes. Issuers: Enter the difference

between the federal deductible amount and the California deductible

Student Loan Interest Deduction Worksheet

amount on line 21f in column B. Holders: Enter the difference between

1. Enter the total amount from Schedule CA, (540),

the amount included in federal gross income and the amount included

line 26, Column A . . . . . . . . . . . . . . . . . . . . . . . 1. ____________

for California purposes on line 21f in column C.

Caution: If the amount on line 1 is zero. STOP. Enter zero on

Foreign income of nonresident aliens. Adjust federal income to reflect

Schedule CA (540), line 26, column B. You are not allowed a

worldwide income computed under California law. Enter losses from

deduction for California.

foreign sources in column B. Enter foreign source income in column C.

2. Enter the total interest you paid in 2004 on

Cost-share payments received by forest landowners. Enter in column B

qualified student loans. Do not include interest

the cost-share payments received from the Department of Forestry and

that was required to be paid after the first

Fire Protection under the California Forest Improvement Act of 1978 or

60 months or interest for voluntary payments . 2. ____________

from the United States Department of Agriculture, Forest Service, under

3. Enter the smaller of line 2 or $2,500 . . . . . . . . . 3. ____________

the Forest Stewardship Program and the Stewardship Incentives

4. Enter the amount from Form 540,

Program, pursuant to the Cooperative Forestry Assistance Act.

line 13 (Note: Use the federal AGI

NOT California AGI) . . . . . . . . . . . 4. ____________

Compensation for False Imprisonment. California excludes compensa-

5. Add line 1 and line 4 . . . . . . . . . . 5. ____________

tion for false imprisonment from income. Enter the amount of

6. Did you file federal Form 2555,

compensation on line 21f, column B.

2555-EZ, or 4563, or are you

Coverdell (ESA) Distributions. If you received a distribution from a

excluding income from sources

Coverdell ESA, report only the taxable amount of the distribution on

within Puerto Rico or America

line 21f.

Samoa from your federal income?

Health Savings Account (HSA) Distributions for unqualified medical

No. Skip line 6a through 6d.

expense. Distributions from a HSA not used for qualified medical

Enter the amount from line 5 on

expenses, and included in federal income, are not taxable for California

line 7 and go to line 8.

purposes. Enter the distribution not used for qualified medical

Yes. Continue to line 6a.

expenses on line 21(f), column A and B.

6a.Enter any foreign earned income

Grants paid to low-income individuals. California excludes grants

exclusion (federal Form 2555,

paid to low-income individuals to construct or retrofit buildings to

line 40 or Form 2555-EZ, line 18) 6a.____________

make them more energy efficient. Federal has no similar exclusion.

6b.Enter any housing exclusion and/or

Enter on line 21f, column B the amount of this type of income.

deduction (federal Form 2555,

Vehicle License Fee (VLF) Refund. If you paid a VLF and included the

line 34 and line 48) . . . . . . . . . . . 6b.____________

fee in itemized deductions in 2003, the VLF refund received in 2004 is

6c.Enter the amount of income from

treated as a recovery of the amount you deducted as an itemized

Puerto Rico that you are excluding

deduction. Generally, the amount of the refund is included in income in

from federal income . . . . . . . . . . 6c.____________

the year received and taxed the same by federal and California. If the

6d.Enter the amount of income from

taxable amount is smaller for California than federal, enter the differ-

American Samoa that you are

ence in column B, line 21f. If the taxable amount is larger for California

excluding (federal Form 4563,

than federal, enter the difference in column C, line 21f. For additional

line 15) . . . . . . . . . . . . . . . . . . . . 6d.____________

information, get FTB Pub. 1001, Supplemental Guidelines to California

7. Add line 5 through line 6d . . . . . . 7. ____________

Adjustments.

8. Enter the amount shown below

Caution: If you itemized for California in 2003 and used the standard

for your filing status

}

deduction for federal, report the taxable portion of the refund in

• Single, head of household, or

column C, line 21f. If you itemized for federal and used the standard

qualifying widow(er) – $40,000 . 8. ____________

deduction for California, the refund is not taxable for California. Enter

• Married filing jointly – $60,000

the amount of the refund included in federal income in column B,

9. Is the amount on line 7 more than

line 21f.

the amount on line 8?

No. Skip lines 9 and 10, enter

Line 22 – Total

-0- on line 11, and go to

Add line 7 through line 21f in column B and column C. Enter the totals

line 12.

on line 22.

Yes. Subtract line 8 from line 7 9. ____________

Line 23 through Line 33 – California law is the same as federal law

10. Divide line 9 by $15,000. Enter the result as a

with the exception of the following:

decimal (rounded to at least three places). Do not

• Line 23 (Educator expense), transfer the amount from column A,

enter more than “1.000” . . . . . . . . . . . . . . . . . . 10. __ . __ __ __

line 23, to column B, line 23.

11. Multiply line 3 by line 10 . . . . . . . . . . . . . . . . . . 11. ____________

• Line 24 (Certain business expenses of fee-basis government

12. Student loan interest deduction.

officials), transfer the amount from column A, line 24, to column B,

Subtract line 11 from line 3 . . . . . . . . . . . . . . . 12. ____________

line 24.

13. Student loan interest adjustment. Subtract

Note: If you filed a federal Form 2106, Employee Business Expense,

line 12 from line 1. Enter the result here and on

or Form 2106-EZ, Unreimbursed Employee Business Expense, you

Schedule CA (540), line 26, column B . . . . . . . 13. ___________

may have an adjustment in column C.

• Line 27 (Tuition and Fees deductions), transfer the amount from

• Line 25 (IRA deduction) – If you are an active duty military domiciled

column A, line 27, to column B, line 27.

outside of California, you may have an adjustment. See line 35

• Line 28 (Health Savings Account Deduction) – Federal law allows a

instructions.

deduction for contributions to an HSA account. California does not

• Line 26 (Student Loan Interest Deduction), California only allows a

deduction for interest required to be paid in the first 60 months.

Schedule CA (540) Instructions 2004 (REV 03-05) Page 5

Instructions For Schedule Ca (540) - State Of California Franchise Tax Board Page 5

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