Screen CAAdj - California Adjustments to Income (1040)

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See also: 1040 California frequently asked questions

Overview

Use this screen to complete Schedule CA (540), California Adjustments (Resident), or Schedule CA (540NR), California Adjustments (Nonresident or Part-Year Resident). If information transferred from UltraTax/1040 does not require additional data or coding, UltraTax/1040-CA shows it on the form only, not in the input screen.

Interest and dividend income is entered in federal Screens B&D, K1, and K1T. These screens may be accessed by using the links provided in Screen CAAdj. Interest and dividend data entered in the statement dialogs in these federal screens is used in the calculation of state income and adjustments. In those interest and dividend statements, you may indicate if data should be applied only to the federal or only to the state return. In addition use of the state postal code and In-State Source % indicates which state should react to the data entered in the federal statements.

  • Enter F in the F/S field to indicate that the item is for the federal return only.
  • Enter S in the F/S field and a non-CA postal code in the State field to indicate that the item transfers only to the state specified and is ignored for federal purposes.
  • For California source interest and dividends reportable on part-year and nonresident California returns, you must enter CA in the State field in these federal statements. Further, for interest and dividends reportable as California source for nonresident California returns, you must also enter a percentage in the In-State Source % field.

Differences for California Law

Enter income adjustments for California in this section. UltraTax CS uses this information to complete Schedule CA (540), Part I, section A or Schedule CA (540NR), Part II, section A.

UltraTax CS automatically calculates California adjustments from information entered at the federal level with respect to items such as taxable interest, dividend income, state income tax refund, unemployment compensation, Social Security benefits and California lottery winnings.

If processing full-year resident returns, UltraTax CS automatically calculates the income adjustments for California law. If you enter amounts in the Subtractions and Additions columns of this input screen, the amounts you enter are used instead of the calculated amounts. If processing nonresident or part-year resident returns, you must enter the income adjustments for California law in the Subtractions and Additions columns and in the CA Source Amts column for all items that are not indicated as Force fields.

Wages subtraction includes 1/2 military pay

Mark this field if there is a wage adjustment that includes a subtraction for military wages earned by a spouse living in a community property state. This field applies only to resident returns when the filing status is married filing separately. When this field is marked, MPA is printed on Schedule CA (540) and is included in the electronic file.

Excess moving expense reimbursement (Force)

The amount of excess moving expense reimbursement included in California source wages on Schedule CA (540NR) defaults to the federal amount when a CA postal code is entered on federal Screen W2, Box 12, Code P for the related reimbursement. Use this field to force the Amount to include as California source wages on Schedule CA (540NR).

Interest (Force) / Dividends (Force)

UltraTax CS automatically calculates additions and subtractions to federal interest and dividends from data entered in federal Screens B&D, K-1, and K1T. Amounts entered in this field transfer to Schedule CA (540) or Schedule CA (540NR), Column B and/or C, in lieu of the calculated amounts.

Interest (Force) / Dividends (Force) - CA Source Amts

UltraTax CS automatically calculates California source interest and dividend income from data entered in federal Screens B&D, K-1, and K1T with a postal code of CA and an in state percentage. Amounts entered in this field transfer to Schedule CA (540NR), Column E, in lieu of the calculated amounts.

Capital gain (loss) (Force)

UltraTax CS automatically calculates California source capital gains or losses included on Schedules D (540) and D (540NR) from data entered in federal Screens B&D, K1, and K1T with postal code CA, and from data entered in Screens CAInc and CACO. Use this field to force an amount different than the calculated amount.

Other gain (loss) (Force)

Use this field to force an amount for Schedule CA (540NR) different from the CA Sources version of Schedule D-1.

NOL from Forms FTB 3805D, 3806, 3807, or 3809

Use this field to enter net operating loss carryovers allowed in the current year calculated on Form 3805D, 3806, 3807, or 3809. The forms are available in the Non Calculating folder and, when completed, are included in electronically filed returns.

Other income (Force CA source amounts)

Enter other income adjustments (subtractions and additions) for California law and amounts taxable to California. Information entered in the statement dialogs print on an accompanying statement.

If a subtraction to income requires Form 3504, Enrolled Tribal Member Certification, to be included with the return in order to support the adjustment, mark the Form 3504 column. UltraTax CS uses this column to display diagnostic messages and to include certain information in the electronic record.

For more information, see this FAQ under Electronic Filing: Form 3504 - Enrolled Tribal Member Certification.

Canceled debt income (Force)

California treats income from canceled debt on a qualified principal residence as taxable even if it is treated as nontaxable for federal purposes. Thus, when code 10 is entered in the Reason Box 2 amount is excluded from gross income field on federal Screen 1099C, the income from the canceled debt is effectively included in California taxable income. UltraTax reports the difference between the taxable income under federal law and the taxable income under California law as an addition on line 21 of Schedule CA(540) or Schedule CA(540NR). Use these fields to force the amount of addition for canceled debt income to zero or to some other amount.

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