What Can I Deduct on My California State Income Taxes?
Most taxpayers have to file both state and federal income taxes. This can be confusing, especially when states have different laws than the federal government regarding deductions. In California, the tax code for deductions resembles federal guidelines. However, same-sex couples and others who qualify for domestic partnership status may get a bigger standard deduction in California than they get from the federal government.
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Standard Deductions
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As of 2011, California offers a standard deduction of $3,637 for single persons or married persons filing separate tax returns. All other filing statuses are entitled to a deduction of $7,374 from their income. In most cases, you must use the same filing status you used on your federal taxes. However, same-sex couples who are registered as domestic partners in California may file joint tax returns even though they must file as single on their federal returns.
Vehicle License Fees
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If you choose to itemize your deductions, you can deduct your vehicle registration fees on both your federal and California taxes. The California Franchise Tax Board reports that as of March 2011, there is no difference in federal and California law regarding this deduction. Thus, if you deduct your vehicle registration fees on your federal taxes, you can also deduct the same fees on your California taxes. You must itemize your deductions on both your federal and state taxes to take advantage of this deduction.
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Dependents
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If you are someone else's dependent for tax purposes, you must figure your standard deduction in California differently than independent taxpayers. You may deduct the smaller of your earned income for the year or the standard deduction for your filing status. For example, if you earned $2,100 this year, your standard deduction is $2,100, not $3,637 or $7,274. If you earned less than $950 for the year, your California standard deduction for the year will be $950.
Considerations
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You can only itemize deductions if you itemize them on your federal return. Thus, you should determine whether itemizing your deductions on your federal return will get you the biggest net benefit -- i.e., most saved on your federal and state returns combined. If you are unsure of whether to itemize your deductions or take a standard deduction on both your federal and California taxes, consult a professional tax preparer or attorney.
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