What California Form 540 2EZ (2016) Is For
California Form 540 2EZ is the simplest income tax return available for full-year California residents in 2016. It is designed for people with straightforward financial situations—primarily wage earners and retirees with limited income types. Unlike the standard Form 540, this version uses a single page and built-in tax tables that already factor in the standard deduction and personal exemption credits.
The form reports income, calculates state tax liability, and determines whether you owe additional tax or qualify for a refund. You can only use California Form 540 2EZ (2016) if you lived in the state for the full year and your income falls within specific limits. If you moved into or out of California during 2016, or have complex income sources, you must file using Form 540NR or the full Form 540.
When You’d Use California Form 540 2EZ (2016)
Form 540 2EZ was due April 18, 2017, with an automatic extension to October 16, 2017 for filing. The extension did not postpone the payment deadline—any tax owed was still due on April 18 to avoid penalties and interest. You cannot use this form if you made an extension payment using Form FTB 3519; in that case, you must use Form 540 or e-file.
You also must file if your gross income or adjusted gross income meets California’s filing thresholds for your age, filing status, and number of dependents. For example, single filers under age 65 with no dependents had to file if gross income exceeded $16,597 or adjusted gross income exceeded $13,278. If you later discover an error on a filed 2EZ return, you must amend using Form 540X and attach a corrected Form 540 or 540A. California allows four years from the original due date—or one year from payment, whichever is later—to file an amended return for a refund.
Key Rules or Details for the 2016 Tax Year
Eligibility Requirements
You may use California Form 540 2EZ (2016) only if all of the following apply:
- You were a full-year California resident (not blind)
- Filing status is single, married/RDP filing jointly, head of household, or qualifying widow(er)
- You have zero to three dependents
- Total income is $100,000 or less (single, HOH) or $200,000 or less (MFJ/RDP)
- Income is limited to wages, interest, dividends, unemployment, Paid Family Leave, pensions, Social Security, Railroad Retirement, and mutual-fund capital gains from Form 1099-DIV box 2a
- No adjustments to income or itemized deductions
- You had only California withholding—no estimated payments, no real estate withholding, and no extension payments
- Only basic credits apply (exemption credits, renter’s credit, California EITC)
- All income is from California sources
If you fall outside these limits—even by a small amount—you must use Form 540 or 540NR.
Dependents Claimed by Someone Else
If another taxpayer can claim you, additional restrictions apply. For example, if someone can claim you and your wages were below $3,779 (single) or $7,908 (married/HOH), you cannot use Form 540 2EZ.
Head of Household Filers
If you file as head of household, you must attach Form FTB 3532. Without it, the Franchise Tax Board (FTB) automatically denies HOH status and recalculates tax at higher rates.
Built-In Deductions
The tax tables for Form 540 2EZ automatically incorporate your standard deduction and exemption credits. You do not enter these amounts separately.
Step-by-Step (High Level)
Step 1: Verify You Qualify
Review the full eligibility list before starting. If you made estimated payments, received non-California income, or had income outside the allowed types, you cannot file using this form.
Step 2: Gather Your Documents
Collect W-2s, 1099-INT, 1099-DIV, 1099-R, your federal Form 1040 or 1040A, and dependent information. Make sure your W-2 withholding reflects California withholding only.
Step 3: Complete Your Header Information
Enter your name, address, SSN, date of birth, and prior year name information if applicable. Joint filers must list names and SSNs in the same order used on their federal return.
Step 4: Choose Filing Status
Select one filing status. If your state filing status differs from your federal status, check the box below line 5.
Step 5: Enter Dependent and Senior Information
Indicate whether someone else can claim you, enter senior exemption counts, and list up to three dependents with full identifying information.
Step 6: Report Your Income
Use lines 9–16 to report:
- Wages (W-2 box 16)
- Taxable interest
- Dividends
- Pension income
- Mutual fund capital gain distributions
Add lines 9–13 to compute your total income for line 16.
Step 7: Calculate Tax Using the 2EZ Table
Use the correct table for your filing status. If you can be claimed as a dependent, use the Dependent Tax Worksheet. The tax tables already include the standard deduction and personal exemption credits.
Step 8: Apply Credits
Enter senior exemption credits and, if eligible, the renter’s credit. If you qualify for the California Earned Income Tax Credit, enter the amount from Form FTB 3514.
Step 9: Report Withholding and Use Tax
List California withholding from W-2 and 1099-R forms. Enter use tax on out-of-state purchases if applicable.
Step 10: Determine Your Refund or Balance Due
Subtract your withholding and credits from tax. Choose direct deposit for the fastest refund or enter payment details if you owe tax.
Step 11: Sign and File
Sign the return (both spouses if filing jointly) and mail it to the designated address or e-file it for faster processing.
Common Mistakes and How to Avoid Them
- Using Form 540 2EZ when ineligible — Many taxpayers mistakenly file the 2EZ despite estimated payments, out-of-state income, or ineligible income types.
- Incorrect wages on line 9 — Use W-2 box 16 (California wages), not federal wages from box 1.
- Including U.S. Treasury interest — Interest from U.S. obligations is not taxable by California and should not be included on line 10.
- Using the wrong tax table — There are separate tables for single, joint/widow(er), and HOH filers.
- Omitting Form FTB 3532 — Required for head of household filers and commonly overlooked.
- Claiming non-California withholding — Only W-2 box 17 amounts marked CA count.
- Missing dependent restrictions — Dependents with low wages often do not qualify to use Form 540 2EZ.
- Overlooking California EITC eligibility — Many workers miss this refundable credit due to lack of awareness.
What Happens After You File
The FTB typically processes e-filed returns within 2–3 weeks and paper returns in 8–12 weeks. Refunds issued via direct deposit arrive fastest, while paper checks take longer. You may review refund status online or by phone.
If you owe tax, payment was due April 18, 2017. Interest accrues on unpaid balances until paid, and California may assess penalties for late filing or late payment. Heavy discrepancies in withholding or dependent claims may trigger a Return Information Notice requesting clarification or documentation. Taxpayers must keep records for at least four years.
If the IRS later adjusts your federal return, you must notify the FTB within six months if the changes increase your California tax liability. If the IRS adjustment results in a California refund, you generally have two years to claim it.
FAQs
Can I e-file California Form 540 2EZ (2016)?
Yes. E-filing is encouraged because it significantly reduces errors and speeds up refund processing. California provides free e-file options through CalFile and approved software vendors.
Can I use Form 540 2EZ if I made estimated tax payments?
No. Form 540 2EZ allows only California withholding. Any estimated tax payments or prior-year credits require you to use Form 540 instead.
How is Form 540 2EZ different from Form 540?
Form 540 2EZ is a streamlined income tax return with strict income limits and no adjustments or itemizing. Form 540 handles all income types, full adjustments, itemized deductions, and more complex filing situations.
Can I use Form 540 2EZ if I live outside California but work in the state?
No. Only full-year California residents may file Form 540 2EZ. Nonresidents and part-year residents must use Form 540NR.
Can married individuals file separately on Form 540 2EZ?
No. Married/RDP filing separately is not allowed. You must use Form 540 or file electronically.
I’m a dependent—can I still file Form 540 2EZ?
Possibly, but restrictions apply. If someone can claim you and your wages are below certain thresholds, or you have your own dependent, you must use Form 540 instead.
For official 2016 instructions, visit the California Franchise Tax Board: https://www.ftb.ca.gov.
