What California Form 3514 (2019) Is For
Form FTB 3514 is the California Franchise Tax Board form used to claim the California Earned Income Tax Credit, which is a refundable credit for eligible workers with California earned income. It is included with a California income tax return and is designed to reduce the amount of tax owed or increase the refund amount for eligible taxpayers.
Form 3514 also helps determine if the taxpayer meets essential California EITC eligibility requirements, such as income limits, residency rules, and the requirement for Social Security Numbers. For 2019, the form may also be used to claim the Young Child Tax Credit if the taxpayer qualifies and has an eligible child under age six.
When You’d Use California Form 3514
If you are filing your 2019 California tax return and think you qualify for the California Earned Income Tax Credit, you need to fill out Form 3514. Depending on where the taxpayer lives and how they file their taxes, the form must be attached to the correct California resident income tax return form, such as Form 540, Form 540-2EZ, or Form 540NR.
Form 3514 is also used to file late or make changes to a return when the credit was not claimed on the original return. In this case, the taxpayer usually files an amended California income tax return and includes Form 3514 with the changes that need to be made. Tax preparation software like Drake Tax can help with calculations, but the taxpayer is still responsible for making sure they meet the requirements.
Key Rules or Details for 2019
To get the California Earned Income Tax Credit in 2019, you must meet certain income limits, residency rules, and have a valid Social Security Number that the California Franchise Tax Board has checked. The Federal Adjusted Gross Income on Form 1040 must be less than the limit for 2019. To receive the credit, you must attach Form FTB 3514 to your California tax return.
When filling out Form 540, Form 540-2EZ, or Form 540-NR, taxpayers must accurately report their California earned income and follow the rules for prorating if necessary. This includes the California Exemption Credit Percentage for people who don't live in California or only file taxes for part of the year. Form 3514 may also support the Young Child Tax Credit for 2019 when the taxpayer qualifies and reports the qualifying child details correctly.
Step-by-Step (High Level)
Step 1: Confirm eligibility for 2019
Review Federal Adjusted Gross Income on Federal Form 1040 and confirm it falls within the 2019 limit for the California Earned Income Tax Credit. Verify that the correct California tax return form will be filed.
Step 2: Verify identification requirements
Verify that all listed individuals' Social Security Numbers are valid for employment and were entered correctly. Check that the Social Security card information matches the SSN for each qualifying child.
Step 3: Determine qualifying child and residency details
Verify that the correct California address is listed and that each eligible child satisfies the age, relationship, and residency requirements. To file on Form 540, Form 540 2EZ, or Form 540NR, verify your residency status.
Step 4: Calculate California earned income and key inputs
Accurately calculate California earned income and make sure it matches the entries on the California income tax return. Verify company information, including a business license number and NAICS code, if self-employment is applicable.
Step 5: Calculate the credit and attach the form
To determine the credit and the Young Child Tax Credit amount, use the California EITC Worksheet and refer to the Form FTB 3514 instructions. Attach Form 3514 to the filed return and keep records in case the Franchise Tax Board needs them.
Common Mistakes and How to Avoid Them
- Reporting sales under the wrong tax jurisdiction: Report sales based on the delivery location rather than the business address or where the order was received.
- Failing to file an annual return when no tax is due: File for every authorized period, even with zero activity, to avoid automatic penalties.
- Claiming the vendor collection credit when filing late or underpaying: Claim the credit only when the return is filed on time, and the full tax due is paid by the deadline.
- Missing a filing frequency change and continuing to file annually: Monitor activity and liability throughout the year and switch to quarterly sales tax return filing when required.
- Submitting an annual return that does not match the whole reporting period: Reconcile records to the assigned annual period so totals reflect the entire year and do not trigger follow-up notices.
What Happens After You File
The California Franchise Tax Board checks eligibility indicators and processes the return after Form 3514 is filed with the California tax return. The agency may verify income levels, Social Security Numbers, and ensure that the information about residency and qualifying children matches the reported data.
The California Earned Income Tax Credit is refundable, so if the claim is accepted, the credit can lower the amount of tax owed or raise the amount of the refund. If the agency identifies a problem, it may send a notice requesting assistance, such as proof of residency, child residency records, or proof of income. The California Taxpayers' Bill of Rights typically provides taxpayers with a means to respond and have their case heard if they disagree with an adjustment.
FAQs
Can a taxpayer claim the California Earned Income Tax Credit without children?
Yes, a taxpayer may qualify without a qualifying child if they meet the 2019 eligibility rules for age, residency, income limits, and Social Security Numbers. The credit amount may be smaller, but the filing process still requires Form 3514 to be filed with the California income tax return.
How does an amended claim work for a missed 2019 credit?
A taxpayer can generally file an amended California tax return for 2019 and include Form 3514 if the credit was missed initially. The amended filing should match the correct return type, such as Form 540 or Form 540NR, and it should include updated credit calculations.
Does the Young Child Tax Credit require a separate application?
No, the Young Child Tax Credit is generally claimed through the same filing process as the California EITC, provided the taxpayer qualifies and meets the age requirement for the child. The taxpayer should ensure the child information and the qualifying conditions are reported correctly on Form 3514.
What other California credits are commonly confused with Form 3514?
Other credits exist, but they are separate from Form 3514 and should not be treated as California EITC inputs. Examples include the Foster Youth Tax Credit, the Child and Dependent Care Tax Credit, and the Dependent Care Credit.
Are payment plans or payment tools part of Form 3514?
No, payment tools only show how a taxpayer can pay off a balance, not how to figure out the California EITC. People who need to make balance payments may encounter terms such as "Installment Agreement Request," "Web Pay," or forms like Form FTB 3567, Form FTB 4058, Form FTB 3532, Form FTB 3596, and other payment-related documents.
