Patrick was born August 31, 1948 and worked as a hardware engineer at JCN Corporation, his taxable wages (after 401k deductions, etc.) is $37,000 for 2015 (he retired in March 2015). His wife Rose (born September 15, 1948) is an accounting manager for Holloway Systems - she earned $120,000 during the year. Their wage amounts are the same for federal and California. Patrick received $23,000 in gross social security payments from the federal government.
Patrick has had $10,000 of Federal income taxes withheld from his paychecks and $4,000 California income taxes withheld from his paychecks. Lilly had $27,700 Federal income tax and $12,000 California income tax withheld from her paycheck. Patrick had $2,300 of federal income taxes withheld on his social security payments.
They have sold some stocks during the year - see Schedule D. All stocks were purchased after 2011 and the basis has been reported by the brokerage to the IRS, thus only Schedule D is required for reporting for federal purposes. You may assume that the cost basis for California purposes is the same as for federal purposes. None of the stocks sold are qualified small business stock.
They received $1,400 of qualified dividend income from their JCN Corporation stock. They also received interest income of $1,105 from Chase Bank.
In April 2015, the Chang's filed their 2014 California income tax return and received a $750 tax refund from the state of California. They itemized their deductions in 2014.
They have children but they have graduated from college and moved out - they provide no support.
They have owned their own home in San Jose since 1984, their mortgage is all paid off, and they have property taxes of $3,800. They own two cars and the deductible part of their DMV fees is $140.
Here is a list of the Chang's cash donations to various organizations:
- Saint Joseph's Church $2,000
- San Jose Mercury News Book Drive $500
- San Jose State University (Fundraising Campaign) $2,000
- American Red Cross $2,000
- Make-A-Wish Foundation $500
With time on his hands, Patrick has prepared and filed the family Form 1040 but he has hired you to prepare the California Form 540 (and any required schedules). You have reviewed the Federal forms and have already concluded they are correct.
You need to prepare a California Form 540 and a California Schedule CA540. If required, you should also prepare a California Schedule D540 (hint: read the directions). You may assume there is NO Federal or California AMT to consider.
Check figure: Form 540, Line 94 Overpaid Tax is $2193.