Paul was born August 1, 1965 and works as an engineer at Dillworth Technology, his taxable wages (after 401k deductions, etc.) is $165,000 per year. His wife Marla (born September 11, 1968) was an office manager for Neptune Designs - she earned $31,000 during the first part of the year and then was laid off for the rest of 2015. Their wage amounts are the same for federal and California. Marla has also received $13,000 in unemployment compensation from the state of California.
Paul has had $35,000 of Federal income taxes withheld from his paychecks and $15,000 California income taxes withheld from his paychecks. Marla had $6,000 Federal income tax and $1,500 California income tax withheld from her Neptune Designs paycheck. There were no taxes withheld on her unemployment compensation.
They have sold some stocks during the year - see Schedule D. Note that everything they sold is long-term capital gains and already has the basis reported to the IRS by the broker; therefore NO Form 8949 has been filed for the Federal tax return. You should 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 $400 of qualified dividend income from their Dillworth Technology stock. They also received interest income of $56 from Chase Bank. Marla is originally from New York City and a few years ago her parents gave her some City of New York municipal bonds which she still owns. She received $300 of interest income from these bonds which is tax exempt for Federal income tax purposes.
They have children but they finished college and have moved out - Paul and Marla do not support them.
They have owned their own home in San Jose since 1992, have mortgage interest of $9,800, and property taxes of $4,000. They own two cars and the deductible part of their DMV fees is $120. In April 2015, they filed their joint 2014 California income tax return and paid $1000 tax due to California.
Here is a list of their cash donations to various organizations:
Saint Mary's (Roman Catholic Church) $2,000
Second Harvest Food Bank $500
Santa Clara University (Fundraising Campaign) $1,000
Make-A-Wish Foundation $100
With time on her hands, Marla has prepared and filed their joint federal Form 1040 but she has hired you to prepare the California Form 540 (and any required schedules). You have reviewed the Federal forms and have already concluded (and may assume) 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.