Hold Schedule C returns (02-23-2012)
The FTB has changed Schedule CA to reduce the amount of self-employment tax deductible for California purposes. According to the FTB, taxpayers may only deduct 50% of the self-employment tax for California purposes, while they can deduct more than 50% for federal purposes. If the FTB is correct, there will be an increase in AGI on Schedule CA for virtually all self-employed taxpayers.
We don’t know how your software is currently computing the self-employment tax deduction for California purposes, and we are not certain that the FTB’s analysis is correct.
We are in discussion with the FTB concerning this issue, and we hope to have an answer for you shortly. In the meantime, we strongly suggest you hold all returns with self-employment tax.
This alert is Courtesy of Spidell Publishing Inc.
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