California Personal Income Tax Booklet - Forms & Instructions

Personal Income Tax Booklet - Forms & Instructions
California 540 Forms & Instructions, 2023 Personal Income Tax Booklet
CALIFORNIA

540

Forms & Instructions

2023
Personal Income Tax Booklet
Members of the Franchise Tax Board
Malia M. Cohen, Chair
Antonio Vazquez, Member
Joe Stephenshaw, Member

COVER GRAPHICS OMITTED FOR DOWNLOADING SPEED

Table of Contents
Important Dates .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  3
Do I Have to File? .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  4
What’s New and Other Important Information for 2023 .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  5
Which Form Should I Use?  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  9
Instructions for Form 540  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   11
Nonrefundable Renter’s Credit Qualification Record  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 25
Voluntary Contribution Fund Descriptions .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 27
Credit Chart .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 29
Frequently Asked Questions .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 31
Additional Information .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 33
Instructions for Filing a 2023 Amended Return .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 35
Form 540, California Resident Income Tax Return  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 39
Schedule CA (540), California Adjustments — Residents .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 47
Instructions for Schedule CA (540) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 55
2023 California Tax Table .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 69
2023 California Tax Rate Schedules .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 75
How To Get California Tax Information .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 77
Franchise Tax Board Privacy Notice on Collection .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 77
Automated Phone Service .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 78

Page 2  Personal Income Tax Booklet  2023

Important Dates
When the due date falls on a weekend or holiday, the deadline to file and pay without penalty is extended to the next business day.
April 15, 2024*

Last day to file and pay the 2023 amount you owe to avoid penalties and interest.* See form FTB 3519 for more information.
See “Interest and Penalties” section for information regarding a one-time timeliness penalty abatement.
*If you are living or traveling outside the United States on April 15, 2024, the dates for filing your tax return and paying
your tax are different. See form FTB 3519 for more information.

October 15, 2024

Last day to file or e-file your 2023 tax return to avoid a late filing penalty and interest computed from the original due date
of April 15, 2024.

April 15, 2024
June 17, 2024
September 16, 2024
January 15, 2025

The dates for 2024 estimated tax payments. Generally, you do not have to make estimated tax payments if the total of your
California withholdings is 90% of your required annual payment. Also, you do not have to make estimated tax payments if
you will pay enough through withholding to keep the amount you owe with your tax return under $500 ($250 if married/registered
domestic partner (RDP) filing separately). However, if you do not pay enough tax either through withholding or by making estimated
tax payments, you may have an underpayment of estimated tax penalty. Get Form 540-ES instructions for more information.

$$$ for You

•	 Federal Earned Income Credit (EIC) – Go to the Internal Revenue
Service (IRS) website at irs.gov/taxtopics and choose topic 601, get
the federal income tax booklet, or go to irs.gov and search for eitc
assistant.
•	 California Earned Income Tax Credit (EITC) – EITC reduces your
California tax obligation, or allows a refund if no California tax is due.
You may qualify if you have wage income earned in California and/or net
earnings from self‑employment of less than $30,951. You do not need
a child to qualify. For more information, go to ftb.ca.gov and search for
eitc or get form FTB 3514, California Earned Income Tax Credit.
•	 Young Child Tax Credit (YCTC) – YCTC reduces your California tax
obligation, or allows a refund if no California tax is due. You may
qualify for the credit if you qualified for the California EITC or you
would otherwise have been allowed the California EITC but you have
earned income of zero dollars or less, and you have at least one
qualifying child who is younger than six years old as of the last day
of the taxable year. For more information, see the instructions for
Form 540, California Resident Income Tax Return, line 76, and get
form FTB 3514, or go to ftb.ca.gov and search for yctc.
•	 Foster Youth Tax Credit (FYTC) – FYTC reduces your California tax
obligation, or allows a refund if no California tax is due. You may
qualify for the credit if you qualified for the California EITC, age 18
to 25, were in foster care while 13 years of age or older and placed
through the California foster care system. For more information, see
the instructions for Form 540, line 77, and get form FTB 3514, or go
to ftb.ca.gov and search for fytc.
•	 Refund of Excess State Disability Insurance (SDI) – If you worked
for at least two employers during 2023 who together paid you more
than $153,164 in wages, you may qualify for a refund of excess SDI.
See instructions for Form 540, line 74.

Common Errors and How to Prevent Them

Claiming estimated tax payments:
•	 Verify the amount of estimated tax payments claimed on your tax
return matches what you sent to the Franchise Tax Board (FTB) for
that year. Go to ftb.ca.gov and login or register for MyFTB to view
your total ­estimated tax payments before you file your tax return.
•	 Verify the overpayment amount from your 2022 tax return you
requested to be applied to your 2023 estimated tax.
Claiming state disability insurance:
•	 Verify the amount of SDI used to figure the amount of excess SDI
claimed on Form 540, line 74, matches amounts from your W-2’s.
Claiming standard deduction or itemized deductions:
•	 See Form 540, line 18 instructions and worksheets for the amount of
standard deduction or itemized deductions you can claim.
Claiming withholding amounts:
•	 Go to ftb.ca.gov and login or register for MyFTB to verify withheld
amount or see instructions for Form 540, line 71. Confirm only
California income tax withheld is claimed.
•	 Verify real estate or other withholding amount from Form 592-B,
Resident and Nonresident Withholding Tax Statement, and Form 593,
Real Estate Withholding Statement. See instructions for Form 540,
line 73.
Claiming refund or payments made on an original return when
amending your tax return:
•	 Go to ftb.ca.gov and login or register for MyFTB to check tax return
records for refund or payments made.
•	 Verify the amount from your original return Form 540, line 115 and
include any adjustment by the FTB.
Use e-file:
•	 By using e-file, you can eliminate many common errors. Go to
ftb.ca.gov and search for efile options.

Help us process your tax return quickly and accurately. When we find an
error, it requires us to stop to verify the information on the tax return,
which slows processing. The most common errors consist of:
•	 Claiming the wrong amount of estimated tax payments.
•	 Claiming the wrong amount of standard deduction or itemized
deductions.
•	 Claiming a dependent already claimed on another return.
•	 The amount of refund or payments made on an original return does
not match our records when amending your tax return.
•	 Claiming the wrong amount of withholding by incorrectly totaling or
transferring the amounts from your federal Form W-2, Wage and Tax
Statement.
•	 Claiming the wrong amount of real estate withholding.
•	 Claiming the wrong amount of SDI.
•	 Claiming the wrong amount of exemption credits.

Personal Income Tax Booklet  2023  Page 3

Do I Have to File?
Steps to Determine Filing Requirement

Gross Income chart below for your filing status, age, and number of
dependents? If yes, you have a filing requirement. If no, go to Step 3.
Step 3: If your income is less than the amounts on the chart, you may
still have a filing requirement. See “Requirements for Children with
Investment Income” and “Other Situations When You Must File.” Do
those instructions apply to you? If yes, you have a filing requirement. If
no, go to Step 4.
Step 4: Are you married/RDP filing separately with separate property
income? If no, you do not have a filing requirement. If yes, prepare a tax
return. If you owe tax, you have a filing requirement.

Step 1: Is your gross income (all income received from all sources in the
form of money, goods, property, and services that are not exempt from
tax) more than the amount shown in the California Gross Income chart
below for your filing status, age, and number of dependents? If yes, you
have a filing requirement. If no, go to Step 2.
Step 2: Is your adjusted gross income (federal adjusted gross
income from all sources reduced or increased by all California income
adjustments) more than the amount shown in the California Adjusted
On 12/31/23,
my filing status was:

California Gross Income
Dependents

and on 12/31/23,
my age was:

(If your 65th birthday is on
January 1, 2024, you are considered to
be age 65 on December 31, 2023)

0

1

2
or more

California Adjusted Gross Income
Dependents
2
0
1
or more

Single or
Head of household

Under 65
65 or older

21,561
28,761

36,428
39,911

47,578
48,831

17,249
24,449

32,116
35,599

43,266
44,519

Married/RDP filing jointly
Married/RDP filing separately

Under 65 (both spouses/RDPs)
65 or older (one spouse/RDP)
65 or older (both spouses/RDPs)

43,127
50,327
57,527

57,994
61,477
68,677

69,144
70,397
77,597

34,503
41,703
48,903

49,370
52,853
60,053

60,520
61,773
68,973

Qualifying surviving spouse/RDP

Under 65
65 or older
Any age

(The income of both spouses/RDPs must
be combined; both spouses/RDPs may be
required to file a tax return even if only one
spouse/RDP had income over the amounts
listed.)

Dependent of another person
– Any filing status

36,428
47,578
32,116
43,266
39,911
48,831
35,599
44,519
More than your standard deduction (Use the California Standard Deduction
Worksheet for Dependents on page 13 to figure your standard deduction.)

Requirements for Children with Investment Income
California law conforms to federal law which allows parents’ election to
report a child’s interest and dividend income from children under age 19
or a student under age 24 on the parent’s tax return. For each child
under age 19 or student under age 24 who ­received more than $2,500 of
investment income in 2023, complete Form 540 and form FTB 3800, Tax
Computation for Certain Children with Unearned Income, to figure the
tax on a separate Form 540 for your child.
If you qualify, you may elect to report your child’s income of more than
$1,250 but less than $12,500 on your tax return by completing form
FTB 3803, Parents’ Election to Report Child’s Interest and Dividends.
To make this election, your child’s income must be only from interest
and/or dividends. To get forms FTB 3800 or FTB 3803, see “Order Forms
and Publications” or go to ftb.ca.gov/forms.

Other Situations When You Must File

If you have a tax liability for 2023 or owe any of the following taxes for
2023, you must file Form 540.
•	 Tax on a lump-sum distribution.
•	 Tax on a qualified retirement plan including an Individual Retirement
Arrangement (IRA) or an Archer Medical Savings Account (MSA).
•	 Tax for children under age 19 or student under age 24 who have
investment income greater than $2,500 (see paragraph above).
•	 Alternative minimum tax.
•	 Recapture taxes.
•	 Deferred tax on certain installment obligations.
•	 Tax on an accumulation distribution from a trust.

Filing Status

Use the same filing status for California that you used for your
federal income tax return, unless you are an RDP. If you are an RDP
and file single for federal, you must file married/RDP filing jointly or
married/RDP filing separately for California. If you are an RDP and file
head of household for federal purposes, you may file head of household
for California purposes only if you meet the requirements to be
considered unmarried or considered not in a domestic partnership.
Exception: If you file a joint tax return for federal purposes, you may file
separately for California if either spouse was either of the following:
•	 An active member of the United States armed forces or any auxiliary
military branch during 2023.
•	 A nonresident for the entire year and had no income from California
sources during 2023.

Page 4  Personal Income Tax Booklet  2023

	

Community Property States: If the spouse earning the California
source income is domiciled in a community property state,
community income will be split equally between the spouses. Both
spouses will have California source income and they will not qualify
for the nonresident spouse exception.
If you had no federal filing requirement, use the same filing status for
California that you would have used to file a federal income tax return.
If you filed a joint tax return and either you or your spouse/RDP was
a nonresident for 2023, file Form 540NR, California Nonresident or
Part-Year Resident Income Tax Return.
Single
You are single if any of the following was true on December 31, 2023:
•	 You were not married or an RDP.
•	 You were divorced under a final decree of divorce, legally separated
under a final decree of legal separation, or terminated your registered
domestic partnership.
•	 You were widowed before January 1, 2023, and did not remarry or
enter into another registered domestic partnership in 2023.
Married/RDP Filing Jointly
You may file married/RDP filing jointly if any of the following is true:
•	 You were married or an RDP as of December 31, 2023, even if you
did not live with your spouse/RDP at the end of 2023.
•	 Your spouse/RDP died in 2023 and you did not remarry or enter into
another registered domestic partnership in 2023.
•	 Your spouse/RDP died in 2024 before you filed a 2023 tax return.
A married couple or RDPs may file a joint return even if only one had
income or if they did not live together all year. However, both must sign
the tax return.
Married/RDP Filing Separately
•	 Community property rules apply to the division of income if you use
the married/RDP filing separately filing status. For more information,
get FTB Pub. 1031, Guidelines for Determining Resident Status,
FTB Pub. 737, Tax Information for Registered Domestic Partners, or
FTB Pub. 1032, Tax Information for Military Personnel. See “Order
Forms and Publications” or go to ftb.ca.gov/forms.
•	 You cannot claim a personal exemption credit for your spouse/RDP
even if your spouse/RDP had no income, is not filing a tax return,
and is not claimed as a dependent on another person’s tax return.
•	 You may be able to file as head of household if your child lived with
you and you lived apart from your spouse/RDP during the entire last
six months of 2023.

Head of Household
For the specific requirements that must be met to qualify for head of
household (HOH) filing status, get FTB Pub. 1540, Tax Information for
Head of Household Filing Status. In general, HOH filing status is for
unmarried individuals and certain married individuals or RDPs living
apart who provide a home for a specified relative. You may be entitled to
use HOH filing status if all of the following apply:
•	 You were unmarried and not in a registered domestic partnership, or
you met the requirements to be considered unmarried or considered
not in a registered domestic partnership on December 31, 2023.
•	 You paid more than one-half the cost of keeping up your home for
the year in 2023.
•	 For more than half the year, your home was the main home for you
and one of the specified relatives who by law can qualify you for HOH
filing status.
•	 You were not a nonresident alien at any time during the year.
For a child to qualify as your foster child for HOH purposes, the child
must either be placed with you by an authorized placement agency or by
order of a court.
California requires taxpayers who use HOH filing status to file form
FTB 3532, Head of Household Filing Status Schedule, to report how the
HOH filing status was determined.
Beginning in tax year 2018, if you do not attach a completed form
FTB 3532 to your tax return, we will deny your HOH filing status.

For more information about the HOH filing requirements, go to
ftb.ca.gov and search for hoh. To get form FTB 3532, see “Order
Forms and Publications” or go to ftb.ca.gov/forms.
Qualifying Surviving Spouse/RDP
Check the box on Form 540, line 5 and use the joint return tax rates for
2023 if all five of the following apply:
•	 Your spouse/RDP died in 2021 or 2022 and you did not remarry or
enter into another registered domestic partnership in 2023.
•	 You have a child, stepchild, or adopted child (not a foster child)
whom you can claim as a dependent or could claim as a dependent
except that, for 2023:
>	 The child had gross income of $4,700 or more;
>	 The child filed a joint return; or
>	 You could be claimed as a dependent on someone else’s return.
	 If the child is not claimed as your dependent, enter the child’s name in 	
	 the entry space under the “Qualifying surviving spouse/RDP” filing
	status.
•	 This child lived in your home for all of 2023. Temporary absences,
such as for vacation or school, count as time lived in the home.
•	 You paid over half the cost of keeping up your home for this child.
•	 You could have filed a joint tax return with your spouse/RDP the year
he or she died, even if you actually did not do so.

What’s New and Other Important Information for 2023
Differences between California and Federal Law
In general, for taxable years beginning on or after January 1, 2015,
California law conforms to the Internal Revenue Code (IRC) as of
January 1, 2015. However, there are continuing differences between
California and federal law. When California conforms to federal tax law
changes, we do not always adopt all of the changes made at the federal
level. For more information, go to ftb.ca.gov and search for conformity.
Additional information can be found in FTB Pub. 1001, Supplemental
Guidelines to California Adjustments, the instructions for California
Schedule CA (540), California Adjustments – Residents, and the
Business Entity tax booklets.
The instructions provided with California tax forms are a summary of
California tax law and are only intended to aid taxpayers in preparing
their state income tax returns. We include information that is most
useful to the greatest number of taxpayers in the limited space available.
It is not possible to include all requirements of the California Revenue
and Taxation Code (R&TC) in the instructions. Taxpayers should not
consider the instructions as authoritative law.
Conformity – For updates regarding federal acts, go to ftb.ca.gov and
search for conformity.

2023 Tax Law Changes/What’s New

Personal Income Tax Products – The 540 Personal Income Tax Booklet
has been reformatted to include only Form 540 and Schedule CA (540),
related instructions, and tax tables. In addition, a new FTB 3514,
California Earned Income Tax Credit Booklet, has been created. The new
FTB 3514 booklet contains form FTB 3514, instructions, and the EITC
tables. To get FTB 3514 booklet and other FTB forms and publications,
see "Order Forms and Publications" or go to ftb.ca.gov/forms.
Use Tax – For taxable years beginning on or after January 1, 2023, and
before January 1, 2029, you may not report business purchases subject
to use tax on your income tax return if you make more than $10,000 in
purchases subject to use tax per calendar year and have not paid use
tax on those purchases to a retailer engaged in business in California
or to a retailer authorized by the California Department of Tax and Fee
Administration to collect the tax. For other use tax requirements, see
specific line instructions for Form 540, line 91 and R&TC Section 6225.
Low-Income Housing Credit – For taxable years beginning on or
after January 1, 2023, California law allows a taxpayer to claim the
Low-Income Housing Credit in the taxable year the building is placed in
service and the federal credit period commences, based upon taxpayer
certification, even if the California Tax Credit Allocation Committee
(CTCAC) has not yet issued a certificate. If the CTCAC issues a certificate
with a credit amount that is inconsistent with the taxpayer's certification,
upon which a credit has been claimed, the taxpayer is required to amend

any previously filed tax returns to reflect the credit amount certified
by the CTCAC. For more information, get form FTB 3521, Low-Income
Housing Credit, and see R&TC Section 17058.
Federal Veterans Auto and Education Improvement Act (VAEIA)
of 2022 – The VAEIA was enacted on January 5, 2023, and made
amendments to the federal Servicemembers Civil Relief Act (SCRA).
California conforms to the following VAEIA provisions:
•	 A spouse of a servicemember shall neither lose nor acquire a
residence or domicile for purposes of taxation with respect to the
person, personal property, or income of the spouse by reason
of being absent or present in any tax jurisdiction of the United
States solely to be with the servicemember in compliance with the
servicemember’s military orders.
•	 For any taxable year of the marriage, a servicemember and the
spouse of such servicemember may elect to use for purposes
of taxation, regardless of the date on which the marriage of the
servicemember and the spouse occurred, any of the following:
>	 The residence or domicile of the servicemember.
>	 The residence or domicile of the spouse.
>	 The permanent duty station of the servicemember.
For more information, get FTB Pub. 1032, Tax Information for Military
Personnel.
Federal Consolidated Appropriations Act (CAA), 2023 – The
CAA, 2023, was enacted on December 29, 2022, and it includes the
federal Setting Every Community Up for Retirement Enhancement
(SECURE) 2.0 Act of 2022. In general, the R&TC conforms to the
changes to the retirement provisions under the SECURE 2.0 Act.
California law does not conform to the federal changes that disallow a
deduction for charitable conservation easement contributions when the
amount of the contribution exceeds 2.5 times the sum of each partner’s
relevant basis in the partnership. For more information on the allowance
of the deduction for charitable conservation easement contributions for
California income tax purposes, get FTB Notice 2023-02.
For more general information, refer to the federal act, the California
R&TC, and Schedule CA (540) instructions.
California Microbusiness COVID-19 Relief Grant – The gross income
exclusion for the California Microbusiness COVID-19 Relief Grant is
extended until taxable years beginning before January 1, 2025. For
more information, see Schedule CA (540) instructions and R&TC
Section 17158.1.
Governor Declared Disaster Extension – The sunset date for the
deduction for disaster losses sustained in Governor declared disaster
areas is extended until taxable years beginning before January 1, 2029.
For more information, get form FTB 3805V, Net Operating Loss (NOL)
Computation and NOL and Disaster Loss Limitations – Individuals,
Estates, and Trusts, and see R&TC Section 17207.14.

Personal Income Tax Booklet  2023  Page 5

New Employment Credit Expansion – For taxable years beginning on or
after January 1, 2023, and before January 1, 2026, the New Employment
Credit is expanded for qualified taxpayers engaged in semiconductor
manufacturing or semiconductor research and development, lithium
production, manufacturing of lithium batteries, or electric airplane
manufacturing. For more information, get FTB 3554, New Employment
Credit Booklet, and see R&TC Section 17053.73.
Program 3.0 California Motion Picture and Television Production
Credit – For taxable years beginning on or after January 1, 2020,
California law allows the Program 3.0 California Motion Picture and
Television Production Credit to reduce net tax below tentative minimum
tax (TMT). For more information, get form FTB 3541, California Motion
Picture and Television Production Credit, and see R&TC Section 17039.
Soundstage Filming Tax Credit – For taxable years beginning on or
after January 1, 2022, California law allows the Soundstage Filming Tax
Credit to reduce net tax below the TMT. For more information, get form
FTB 3541 and see R&TC Section 17039.
California Hope, Opportunity, Perseverance, and Empowerment
(HOPE) for Children Trust Account Program – The California HOPE for
Children Trust Account Act created the California HOPE for Children
Trust Account Program for the purpose of providing an eligible child
with a HOPE trust account. For taxable years beginning on or after
January 1, 2023, California law allows an exclusion from gross income
for any funds deposited, any investment returns accrued, and any
accrued interest in a HOPE trust account and for any funds from a HOPE
trust account that is withdrawn or transferred by an eligible youth. For
purposes of eligibility for the California Earned Income Tax Credit and
Young Child Tax Credit, any funds deposited, any investment returns
accrued, and any accrued interest in a HOPE trust account and any funds
from a HOPE trust account that is withdrawn or transferred by an eligible
youth are not considered earned income. For more information, see
Schedule CA (540) instructions and R&TC Section 17141.5.
Interagency Council on Homelessness Payment Exclusion – For
taxable years beginning on or after January 1, 2023, California law
allows an exclusion from gross income for payments received pursuant
to the California Welfare and Institutions Code Section 8257 by
members of the Interagency Council on Homelessness, its advisory
committee, or its working groups who are or have been homeless.
For more information, see Schedule CA (540) instructions and R&TC
Section 17131.13.
Kincade Wildfire Exclusion – For taxable years beginning on or after
January 1, 2020, and before January 1, 2028, California law allows a
qualified taxpayer an exclusion from gross income for any qualified
amount received in a settlement from Pacific Gas and Electric (PG&E)
Company or its subsidiary relating to the 2019 Kincade Fire. If a qualified
taxpayer included income for a qualified amount received from this
settlement in a prior taxable year, the taxpayer can file an amended
tax return for that year within the normal statute of limitations. For
more information, see Schedule CA (540) instructions and R&TC
Section 17139.2.
Zogg Wildfire Exclusion – For taxable years beginning on or after
January 1, 2020, and before January 1, 2028, California law allows a
qualified taxpayer an exclusion from gross income for any qualified
amount received in a settlement from PG&E Company or its subsidiary
relating to the 2020 Zogg Fire. If a qualified taxpayer included income
for a qualified amount received from this settlement in a prior taxable
year, the taxpayer can file an amended tax return for that year within
the normal statute of limitations. For more information, see Schedule
CA (540) instructions and R&TC Section 17139.3.
High-Road Cannabis Tax Credit – For taxable years beginning on or
after January 1, 2023, and before January 1, 2028, the High-Road
Cannabis Tax Credit (HRCTC) will be available to licensed commercial
cannabis businesses that meet the qualifications. The credit is allowed to
a qualified taxpayer in an amount equal to 25% of qualified expenditures
in the taxable year. The credit amount cannot exceed $250,000. Unused
credit may be carried forward up to eight years. All types of entities,
except for exempt organizations, are eligible to claim this credit.
A qualified taxpayer must request a tentative credit reservation from the
FTB during the month of July for each taxable year or within 30 days
of the start of their taxable year if the qualified taxpayer’s taxable year
begins from August 1 through December 31.
For more information, get form FTB 3820, High-Road Cannabis Tax Credit,
see R&TC Section 17053.64, or go to ftb.ca.gov and search for hrctc.

Page 6  Personal Income Tax Booklet  2023

Cannabis Equity Tax Credit – For taxable years beginning on or after
January 1, 2023, and before January 1, 2028, a Cannabis Equity Tax
Credit (CETC) is available to equity licensees that have received approval,
including approval contingent upon the availability of funds, for the
fee waiver and deferral program administered by the Department of
Cannabis Control (DCC). The allowable credit is $10,000 per taxable year
for each qualified taxpayer. Unused credit may be carried forward up to
eight years. All types of entities, except for exempt organizations, are
eligible to claim this credit. For more information, get form FTB 3821,
Cannabis Equity Tax Credit, see R&TC Section 17053.82, or go to
ftb.ca.gov and search for cetc.
No-cost or Low-cost Health Care Coverage Information – For taxable
years beginning on or after January 1, 2023, we added a new health care
coverage information question on the tax return. If you are interested in
no-cost or low-cost health care coverage information, check the “Yes”
box on Form 540, Side 5. See Health Care Coverage Information in the
instructions.
Discharge of Student Fees – For taxable years beginning on or after
January 1, 2022, and before January 1, 2027, California law allows an
exclusion from gross income for any amount of unpaid fees due or owed
by a student to a community college that was discharged pursuant to
California Education Code Section 32527. For more information, see
Schedule CA (540) instructions and R&TC Section 17131.21.
Guaranteed Income Pilot Program Payment Exclusion – Beginning
on June 30, 2022, and before July 1, 2026, California law allows an
exclusion from gross income for any payments received by an individual
from a guaranteed income pilot program or project that receives a grant
pursuant to California Welfare and Institution Code Section 18997.
For more information, see Schedule CA (540) instructions and R&TC
Section 17131.12.
Reporting Requirements – Taxpayers may need to file form FTB 4197,
Information on Tax Expenditure Items, with the tax return to report tax
expenditure items as part of the FTB’s annual reporting requirements
under R&TC Section 41. To determine if you have an R&TC
Section 41 reporting requirement, see the R&TC Section 41 Reporting
Requirements section or get form FTB 4197.

R&TC Section 41 Reporting Requirements

Taxpayers should file form FTB 4197 with the tax return to report tax
expenditure items as part of the FTB’s annual reporting requirements
under R&TC Section 41. “Tax expenditure” means a credit, deduction,
exclusion, exemption, or any other tax benefit provided for by the state.
The FTB uses information from form FTB 4197 for reports required by the
California Legislature. Taxpayers that have a reporting requirement for any
of the following should file form FTB 4197:
•	 For taxable years beginning on or after January 1, 2020, and
before January 1, 2028, qualified taxpayers who benefited from the
exclusion from gross income for any qualified amount received in
a settlement from PG&E Company or its subsidiary relating to the
2019 Kincade Fire.
•	 For taxable years beginning on or after January 1, 2020, and
before January 1, 2028, qualified taxpayers who benefited from the
exclusion from gross income for any qualified amount received in
a settlement from PG&E Company or its subsidiary relating to the
2020 Zogg Fire.
•	 For taxable years beginning on or after January 1, 2020, and before
January 1, 2028, taxpayers who benefited from the exclusion from
gross income for certain emergency financial aid grants received by a
postsecondary education student.
•	 For taxable years beginning on or after January 1, 2021, and before
January 1, 2026, taxpayers who benefited from the exclusion from
gross income for the amount of student loans discharged under
the ARPA for the following: loans provided expressly for postsecondary educational expenses if the loans were made, insured,
or guaranteed by a federal, state or local government entity, or an
eligible educational institution; private education loans; loans made
by certain educational institutions/organizations by tax-exempt
organizations to refinance a loan.
•	 For taxable years beginning before January 1, 2027, qualified
taxpayers who benefited from the exclusion from gross income for
any amount received in a settlement from Southern California Edison
for claims relating to the 2017 Thomas Fire or the 2018 Woolsey Fire.
•	 For taxable years beginning on January 1, 2022, and before
January 1, 2027, taxpayers who benefited from the exclusion of
gross income for any amount received as a rebate, voucher, or other
financial incentive issued by a public water system, as defined, local

government, or state agency for participation in a turf replacement
water conservation program.
•	 For taxable years beginning on or after January 1, 2021, taxpayers
who benefited from the exclusion from gross income for the
Paycheck Protection Program (PPP) loans forgiveness, other loan
forgiveness, the Economic Injury Disaster Loan (EIDL) advance
grant, restaurant revitalization grant, or shuttered venue operator
grant, and related eligible expense deductions.
•	 Beginning in taxable year 2020, a taxpayer operating a commercial
cannabis activity that is licensed under California Medicinal and
Adult-Use Cannabis Regulation and Safety Act (CA MAUCRSA).
For more information, get form FTB 4197.

Other Important Information

Timeliness Penalty Abatement – For taxable years beginning on or after
January 1, 2022, an individual taxpayer may elect to request a one-time
abatement of a failure-to-file or failure-to-pay timeliness penalty either
orally or in writing, if certain conditions are met. For more information,
see specific line instructions for Form 540, Interest and Penalties
section, and R&TC Section 19132.5.
Young Child Tax Credit Expansion – For taxable years beginning on or
after January 1, 2022, California expanded the YCTC eligibility to include
an eligible individual with a qualifying child who would otherwise have
been allowed the California EITC but the individual has earned income of
zero dollars or less, does not have net losses in excess of $33,497 in the
current taxable year, and does not have wages, salaries, tips, and other
employee compensation in excess of $33,497 in the current taxable
year. For more information, get form FTB 3514, or go to ftb.ca.gov and
search for yctc.
Foster Youth Tax Credit – For taxable years beginning on or after
January 1, 2022, the refundable FYTC is available to an individual and/or
spouse/RDP age 18 to 25, who is allowed the California EITC for the
taxable year, was in foster care while 13 years of age or older and placed
through the California foster care system. For the current taxable year,
the maximum amount of credit allowable for each eligible taxpayer is
$1,117 and the credit amount phases out as earned income exceeds the
threshold amount of $25,775 and completely phases out at $30,932. For
more information, see specific line instructions for Form 540, line 77,
and get form FTB 3514, see R&TC Section 17052.2, or go to ftb.ca.gov
and search for fytc.
Voter Registration Information – For taxable years beginning on or after
January 1, 2022, we added a Voter Registration Information checkbox
on the tax return. For more information, see specific line instructions for
Form 540, Voter Information section.
Federal Acts – In general, the R&TC does not conform to the changes
under the following federal acts. California taxpayers continue to
follow the IRC as of the specified date of January 1, 2015, with
modifications. For specific adjustments due to the following acts, see the
Schedule CA (540) instructions.
•	 Inflation Reduction Act of 2022 (enacted on August 16, 2022)
•	 American Rescue Plan Act (ARPA) of 2021 (enacted on
March 11, 2021)
•	 Consolidated Appropriations Act (CAA), 2021 (enacted on
December 27, 2020)
•	 Coronavirus Aid, Relief, and Economic Security (CARES) Act
(enacted on March 27, 2020)
•	 Setting Every Community Up for Retirement Enhancement (SECURE)
Act (enacted on December 20, 2019)
Gross Income Exclusion for Bruce’s Beach – Effective September 30, 2021,
California law allows an exclusion from gross income for the first time sale
in the taxable year in which the land within Manhattan State Beach, known
as “Peck’s Manhattan Beach Tract Block 5” and commonly referred to as
“Bruce’s Beach” is sold, transferred, or encumbered. A recipient’s gross
income does not include the following:
•	 Any sale, transfer, or encumbrance of Bruce’s Beach;
•	 Any gain, income, or proceeds received that is directly derived from
the sale, transfer, or encumbrance of Bruce’s Beach.
For more information, get Schedule D (540), California Capital Gain or
Loss Adjustment.
Moving Expense Deduction – For taxable years beginning on or after
January 1, 2021, taxpayers should file California form FTB 3913, Moving
Expense Deduction, to claim moving expense deductions. Attach the
completed form FTB 3913 to Form 540. For more information, see
Schedule CA (540) instructions and get form FTB 3913.

Elective Tax for Pass-Through Entities (PTE) and Credit for Owners –
For taxable years beginning on or after January 1, 2021, and before
January 1, 2026, California law allows an entity taxed as a partnership
or an “S” corporation to annually elect to pay an elective tax at a rate of
9.3% based on its qualified net income. The election shall be made on
an original, timely filed return and is irrevocable for the taxable year.
The law allows a credit against the personal income tax to a taxpayer,
other than a partnership, that is a partner, shareholder, or member
of a qualified entity that elects to pay the elective tax, in an amount
equal to 9.3% of the partner’s, shareholder’s, or member’s pro rata
share or distributive share and guaranteed payments of qualified net
income subject to the election made by the qualified entity. Generally,
a disregarded business entity and its partners or members cannot
receive the credit, except for a disregarded single member limited
liability company (SMLLC) that is owned by an individual, fiduciary,
estate, or trust subject to personal income tax. For more information, go
to ftb.ca.gov and search for pte elective tax and get the following PTE
elective tax forms and instructions:
•	 Form FTB 3893, Pass-Through Entity Elective Tax Payment Voucher
•	 Form FTB 3804, Pass-Through Entity Elective Tax Calculation
•	 Form FTB 3804-CR, Pass-Through Entity Elective Tax Credit
Dependent Exemption Credit with No ID – For taxable years
beginning on or after January 1, 2018, taxpayers claiming a
dependent exemption credit for a dependent who is ineligible for
a Social Security Number (SSN) and a federal Individual Taxpayer
Identification Number (ITIN) may provide alternative information to the
FTB to identify the dependent. For more information, get form FTB 3568,
Alternative Identifying Information for the Dependent Exemption Credit.
Taxpayers may amend their tax return beginning with taxable year 2018 to
claim the dependent exemption credit. If claiming a refund, taxpayers must
amend their returns within the statute of limitations. For more information on
how to amend your tax returns, see “Instructions for Filing a 2023 Amended
Return.”
Worker Status: Employees and Independent Contractors – Some
individuals may be classified as independent contractors for federal
purposes and employees for California purposes, which may also
cause changes in how their income and deductions are classified.
Proposition 22 was operative as of December 16, 2020, and may affect
a taxpayer’s worker classification. For more information, see Schedule
CA (540) instructions.
Minimum Essential Coverage Individual Mandate – For taxable years
beginning on or after January 1, 2020, California law requires residents
and their dependents to obtain and maintain minimum essential
coverage, also referred to as qualifying health care coverage. Individuals
who fail to maintain qualifying health care coverage for any month
during the taxable year will be subject to a penalty unless they qualify
for an exemption. For more information, see specific line instructions for
Form 540, line 92, or get the following health care forms, instructions,
and publications:
•	 Form FTB 3853, Health Coverage Exemptions and Individual Shared
Responsibility Penalty
•	 Form FTB 3895, California Health Insurance Marketplace Statement
•	 FTB Pub. 3895B, California Instructions for Filing Federal Forms
1094-B and 1095-B
•	 FTB Pub. 3895C, California Instructions for Filing Federal Forms
1094-C and 1095-C
Rental Real Estate Activities – For taxable years beginning on or after
January 1, 2020, the dollar limitation for the offset for rental real estate
activities shall not apply to the low income housing credit program.
For more information, see R&TC Section 17561(d)(1). Get form
FTB 3801-CR, Passive Activity Credit Limitations, for more information.
Small Business Accounting/Percentage of Completion Method – For
taxable years beginning on or after January 1, 2019, California law
generally conforms to the TCJA’s definition of small businesses as
taxpayers whose average annual gross receipts over three years do
not exceed $25 million. These small businesses are exempt from the
requirement of using the Percentage of Completion Method of accounting
for any construction contract if the contract is estimated to be completed
within two years from the date the contract was entered into. A taxpayer
may elect to apply the provision regarding accounting for long term
contracts to contracts entered into on or after January 1, 2018.
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

Personal Income Tax Booklet  2023  Page 7

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 Schedule CA (540) and
form FTB 3504, Enrolled Tribal Member Certification.
Schedule X, California Explanation of Amended Return Changes – 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 2023 Amended Return.”
Improper Withholding on Severance Paid to Veterans – The federal
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.
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 law generally
conforms to the federal income tax treatment of ABLE accounts.
Additional information can be found in the instructions of form
FTB 3805P, Additional Taxes on Qualified Plans (Including IRAs) and
Other Tax-Favored Accounts.
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. For more
information, see specific line instructions for Form 540, line 91.
Mandatory Electronic Payments – You are required to remit all your
payments electronically once you make an estimated tax or extension
payment exceeding $20,000 or you file an original tax return with
a total tax liability over $80,000. Once you meet this threshold, all
subsequent payments regardless of amount, tax type, or taxable year
must be remitted electronically. The first payment that would trigger the
mandatory e-pay requirement does not have to be made electronically.
Individuals that do not send the payment electronically will be subject to
a 1% noncompliance penalty.
You can request a waiver from mandatory e-pay if one or more of the
following is true:
•	 You have not made an estimated tax or extension payment in excess
of $20,000 during the current or previous taxable year.
•	 Your total tax liability reported for the previous taxable year did not
exceed $80,000.
•	 The amount you paid is not representative of your total tax liability.
For more information or to obtain the waiver form, go to
ftb.ca.gov/e-pay. Electronic payments can be made using Web Pay on
the FTB’s website, EFW as part of the e-file return, or your credit card.
Estimated Tax Payments – Taxpayers are required to pay 30% of the
required annual payment for the 1st required installment, 40% of the
required annual payment for the 2nd required installment, no installment
is due for the 3rd required installment, and 30% of the required annual
payment for the 4th required installment.
Taxpayers with a tax liability less than $500 ($250 for married/RDP filing
separately) do not need to make estimated tax payments.
Backup Withholding – With certain limited exceptions, payers that
are required to withhold and remit backup withholding to the IRS are
also required to withhold and remit to the FTB on income sourced to
California. If the payee has backup withholding, the payee must contact
the FTB to provide a valid taxpayer identification number, before filing
the tax return. Failure to provide a valid taxpayer identification number
may result in a denial of the backup withholding credit. For more
information, go to ftb.ca.gov and search for backup withholding.
Registered Domestic Partners (RDPs) – Under California law, RDPs
must file their California income tax return using either the married/RDP
filing jointly or married/RDP filing separately filing status. RDPs have the
same legal benefits, protections, and responsibilities as married couples
unless otherwise specified.

Page 8  Personal Income Tax Booklet  2023

If you entered into a same sex legal union in another state, other than
a marriage, and that union has been determined to be substantially
equivalent to a California registered domestic partnership, you
are required to file a California income tax return using either the
married/RDP filing jointly or married/RDP filing separately filing status.
For purposes of California income tax, references to a spouse, husband,
or wife also refer to a California RDP, unless otherwise specified.
When we use the initials RDP, they refer to both a California registered
domestic “partner” and a California registered domestic “partnership,”
as applicable. For more information on RDPs, get FTB Pub. 737.
Direct Deposit Refund – You can request a direct deposit refund on
your tax ­return whether you e-file or file a paper tax return. Be sure to
fill in the routing and account numbers carefully and double-check the
numbers for accuracy to avoid it being rejected by your bank.
Direct Deposit for ScholarShare 529 College Savings Plans – If you
have a ScholarShare 529 College Savings Plan account maintained by
the ScholarShare Investment Board, you may have your refund directly
deposited to your ScholarShare account. Go to scholarshare529.com
for instructions.
California Disclosure Obligations – If the individual was involved in a
reportable transaction, including a listed transaction, the individual may
have a disclosure requirement. Attach federal Form 8886, Reportable
Transaction Disclosure Statement, to the back of the California tax return
along with any other supporting schedules. If this is the first time the
reportable transaction is disclosed on the tax return, send a duplicate
copy of the federal Form 8886 to the address below. The FTB may
impose penalties if the individual fails to file federal Form 8886, or fails
to provide any other required information. A material advisor is required
to provide a reportable transaction number to all taxpayers and material
advisors for whom the material advisor acts as a material advisor.
	

TAX SHELTER FILING
ABS 389 MS F340
FRANCHISE TAX BOARD
PO BOX 1673
SACRAMENTO CA 95812-9900

For more information, go to ftb.ca.gov and search for disclosure
obligation.

Which Form Should I Use?
e-file and you won’t have to
decide which form to use!
The software will select the
correct form for you.

Were you and your spouse/RDP residents during the entire year 2023?
Yes.	Check the chart below to see which form to use.
No.	 Use Form 540NR. To download or order the California Nonresident or Part‑Year Resident Booklet, go
to ftb.ca.gov/forms or see “Where to Get Income Tax Forms and Publications.”

Form 540 2EZ

Form 540

Form not included in this booklet. If you qualify
to use Form 540 2EZ, see “Where To Get Income
Tax Forms and Publications” to download or
order this form.

Filing Status

Single, married/RDP filing jointly, head of
household, qualifying surviving spouse/RDP

Any filing status

Dependents
Amount of Income

0-3 allowed

All dependents you are entitled to claim

Total income of:
•	$100,000 or less if single or head of household
•	$200,000 or less if married/RDP filing jointly or
qualifying surviving spouse/RDP
You cannot use Form 540 2EZ if you (or your
spouse/RDP) can be claimed as a dependent
by another taxpayer, and your TOTAL income is
less than or equal to $17,813 if single; $35,576 if
married/RDP filing jointly or qualifying surviving
spouse/RDP; or $25,176 if head of household.

Any amount of income

Sources of Income

Only income from:
•	Wages, salaries, and tips
•	Taxable interest, dividends, and pensions
•	Taxable scholarship and fellowship grants (only if
reported on federal Form(s) W‑2)
•	Capital gains from mutual funds (reported on
federal Form 1099‑DIV, box 2a only)
•	Unemployment compensation reported on federal
Form 1099-G
•	Paid Family Leave Insurance
•	U.S. social security benefits
•	Tier 1 and tier 2 railroad retirement payments

All sources of income

Adjustments to
Income
Standard Deduction
Itemized Deductions
Payments

No adjustments to income

All adjustments to income

Allowed

Allowed

No itemized deductions

All itemized deductions

Only withholding shown on federal Form(s) W-2
and 1099‑R

•	Withholding from all sources
•	Estimated tax payments
•	Payments made with extension
•	Excess State Disability Insurance (SDI) or
Voluntary Plan Disability Insurance (VPDI)

Tax Credits

•	Refundable California earned income tax credit
•	Refundable young child tax credit
•	Refundable foster youth tax credit
•	Personal exemption credit
•	Senior exemption credit
•	Up to three dependent exemption credits
•	Nonrefundable renter’s credit

All tax credits

Other Taxes

Only tax computed using the 540 2EZ Table

All taxes

If you qualify to use Form 540 2EZ, you may be eligible to use CalFile.
Visit ftb.ca.gov and search for calfile. It’s fast, easy, and free.
If you don’t qualify for CalFile, you qualify for e-file.
Go to ftb.ca.gov and search for efile options.

Personal Income Tax Booklet  2023  Page 9 

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Visit our website:

ftb.ca.gov

Page 10  Personal Income Tax Booklet  2023

2023 Instructions for Form 540
California Resident Income Tax Return

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2015, and the C
­ alifornia Revenue and Taxation Code (R&TC).

Before You Begin
Complete your federal income tax return Form 1040, U.S. Individual
Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors,
before you begin your Form 540, California Resident Income Tax Return.
Use information from your federal income tax return to complete your
Form 540. Complete and mail Form 540 by April 15, 2024. If unable to
mail your tax return by this date, see "Important Dates" at the beginning
of this booklet. Also, see “Interest and Penalties” section for information
regarding a one-time timeliness penalty abatement.
You may qualify for the federal earned income credit.
See "$$$ for You" at the beginning of this booklet for more
information.
Note: The lines on Form 540 are numbered with gaps in the line
number sequence. For example, line 20 through line 30 do not appear
on Form 540, so the line number that follows line 19 on Form 540 is
line 31.
Caution: Form 540 has six sides. When filing Form 540, you must send
all six sides to the Franchise Tax Board (FTB).
If you need to amend your California resident income tax return,
complete an amended Form 540 and check the box at the top of
Form 540 indicating AMENDED return. Attach Schedule X, California
Explanation of Amended Return Changes, to the amended Form 540. For
specific instructions, see “Instructions for Filing a 2023 Amended Return.”
	 To use our automated phone service and codes, call
800.338.0505. For the complete code list, see “Automated
Phone Service.”

Filling in Your Tax Return
•	 Use black or blue ink on the tax return you send to the FTB.
•	 Enter your social security number(s) or individual taxpayer
­identification number(s) at the top of Form 540, Side 1 through Side 6.
•	 Print numbers and CAPITAL LETTERS in the space provided. Be sure
to line up dollar amounts.
•	 If you do not have an entry for a line, leave it blank unless the
instructions for a line specifically tell you to enter -0-. Do not enter a
dash or the word “NONE.”

Name(s) and Address
Print your first name, middle initial, last name, and street address in the
spaces provided at the top of the form.
Suffix
Use the Suffix field for generational name suffixes such as “SR”, “JR”,
“III”, “IV”. Do not enter academic, professional, or honorary suffixes.
Additional Information
Use the Additional Information field for “In-Care-Of” name and other
supplemental address information only.
Foreign Address
If you have a foreign address, follow the country’s practice for entering
the city, county, province, state, country, and postal code, as applicable,
in the appropriate boxes. Do not abbreviate the country name.
Principal Business Activity (PBA) Code
For federal Schedule C (Form 1040), Profit or Loss From Business
(Sole Proprietorship), business filers, enter the numeric PBA code from
federal Schedule C (Form 1040), line B.
Date of Birth (DOB)
Enter your DOBs (mm/dd/yyyy) in the spaces provided. If your filing
status is married/RDP filing jointly or married/RDP filing separately,
enter the DOBs in the same order as the names.
Prior Name
If you or your spouse/RDP filed your 2022 tax return under a different
last name, write the last name only from the 2022 tax return.

Social Security Number (SSN) or Individual
Taxpayer Identification Number (ITIN)
Enter your SSN in the spaces provided. If filing a joint tax return, enter
the SSNs in the same order as the names.
If you do not have an SSN because you are a nonresident or resident
alien for federal tax purposes, and the Internal Revenue Service (IRS)
issued you an ITIN, enter the ITIN in the space for the SSN. An ITIN is a
tax processing number issued by the IRS to foreign nationals and others
who have a federal tax filing requirement and do not qualify for an SSN.
It is a nine‑digit number that always starts with the number 9.

Principal Residence
If you are under 18 years old or have not filed a California resident
income tax return in the prior year, then leave the county and
principal/physical address fields blank.
Only complete this section if you are age 18 or older and you have filed a
California resident income tax return in the prior year.
•	 County – Enter the county where you have your principal/physical
residence on the date that you file your Form 540. If you reside in a
foreign country at the time of filing, leave the county field blank.
•	 If your principal/physical residence address at the time of filing is the
same as the address you provided at the top of this form, check the
box provided on this line.
•	 If your principal/physical residence address at the time of filing is
different from the address at the top of this form, provide the address
of your principal/physical residence in the spaces provided.
•	 If you reside in a foreign country at the time of filing, enter the city,
province or state, and country in the city field. Follow the country’s
practice for entering the postal code. Do not abbreviate the country
name.

Filing Status
Line 1 through Line 5 – Filing Status
Check only one box for line 1 through line 5. Enter the required
additional information if you checked the box on line 3 or line 5. For
filing status requirements, see page 4.
Usually, your California filing status must be the same as the filing status
you used on your federal income tax return.
Exception for Married Taxpayers Who File a Joint Federal Income Tax
Return – You may file separate California returns if either spouse was
either of the following:
•	 An active member of the United States Armed Forces or any auxiliary
military branch during 2023.
•	 A nonresident for the entire year and had no income from California
sources during 2023.
	Caution – Community Property States: If either spouse earned
California source income while domiciled in a community property
state, the community income will be split equally between the
spouses. Both spouses will have California source income and they
will not qualify for the nonresident spouse exception. For more
information, get FTB Pub. 1031, Guidelines for Determining Resident
Status.
If you had no federal filing requirement, use the same filing status for
­California you would have used to file a federal income tax return.
Registered domestic partners (RDPs) who file single for federal must
file married/RDP filing jointly or married/RDP filing separately for
California. If you are an RDP and file head of household for federal
purposes, you may file head of household for California purposes only
if you meet the requirements to be considered unmarried or considered
not in a domestic partnership.

Personal Income Tax Booklet  2023  Page 11

Instructions: Form 540	
If you filed a joint tax return and either you or your spouse/RDP was a
­nonresident for 2023, you must file Form 540NR, California Nonresident
or Part-Year Resident Income Tax Return.

Exemptions
Line 6 – Can be Claimed as Dependent

 601

Check the box on line 6 if someone else can claim you or
your spouse/RDP as a dependent on their tax return, even if
they chose not to.

Line 7 – Personal Exemptions
Did you check the box on line 6?
No	 Follow the instructions on Form 540, line 7.
Yes	 Ignore the instructions on Form 540, line 7. Instead, enter in the
box on line 7 as shown below for your filing status:
•	 Single or married/RDP filing separately, enter -0-.
•	 Head of household, enter -0-.
•	 Married/RDP filing jointly and both you and your spouse/RDP
can be claimed as dependents, enter -0-.
•	 Married/RDP filing jointly and only one spouse/RDP can be
claimed as a dependent, enter 1.
Do not claim this credit if someone else can claim you as a d­ ependent
on their tax return.

Line 8 – Blind Exemptions
The first year you claim this exemption credit, attach a doctor’s
statement to the back of Form 540 indicating you or your spouse/RDP
are visually impaired. If you e-file, attach any requested forms,
schedules, and documents according to your software’s instructions.
Visually impaired means not capable of seeing better than 20/200 while
wearing glasses or contact lenses, or if your field of vision is not more
than 20 degrees.
Do not claim this credit if someone else can claim you as a dependent
on their tax return.

Line 9 – Senior Exemptions
If you were 65 years of age or older by December 31, 2023*, you should
claim an additional exemption credit on line 9. If you are married/or
an RDP, each spouse/RDP 65 years of age or older should claim an
additional credit. You may contribute all or part of this credit to the
California Seniors Special Fund. See “Voluntary Contribution Fund
Descriptions” for more information.
*If your 65th birthday is on January 1, 2024, you are considered to be
age 65 on December 31, 2023.
Do not claim this credit if someone else can claim you as a dependent
on their tax return.

Line 10 – Dependent Exemptions
To claim an exemption credit for each of your dependents, you must
write each dependent’s first and last name, SSN or ITIN, and relationship
to you in the space provided. If you are claiming more than three
dependents, attach a statement with the required dependent information
to your tax return. The persons you list as dependents must be the same
persons you listed as dependents on your federal income tax r