How to File Your California Tax Return for 2020: Step-by-Step Guide

Filing your California tax return for 2020 was unlike most tax years due to the COVID-19 pandemic and related policy changes. Based on official California Franchise Tax Board (FTB) resources, this guide is designed for residents, part-year residents, and nonresidents who earned income from California sources. Whether you are an individual taxpayer, a small business owner, or someone who qualifies for unique state tax credits, these step-by-step instructions will help you navigate the process.

The 2020 tax year included significant adjustments such as extended filing deadlines, new or expanded tax credits, and special provisions for businesses affected by the pandemic. Changes included the expansion of the California Earned Income Tax Credit (CalEITC), the introduction of the Young Child Tax Credit, and California’s decision to match federal government rules on forgiven Paycheck Protection Program (PPP) loans.

By following this guide, you will learn who was required to file a California tax return for 2020, which forms and schedules apply to your situation, and how to complete each section accurately. You will also find instructions for making payments, checking refund status, and avoiding common filing mistakes. Each section builds on the previous one, so you can move step-by-step from gathering your documents to submitting your completed return.

2020 Overview: Filing Requirements, Thresholds, and Deadlines

Who Needs to File in California for 2020

You must file a California tax return for the 2020 tax year if you were a resident, part-year resident, or nonresident who earned income from California sources. Filing is also required if you had California income tax withheld from your pay, wish to claim a refund of withheld taxes, or are eligible for California-specific tax credits such as the California Earned Income Tax Credit (CalEITC). Even if you do not meet income thresholds, you must file with self-employment earnings of $400 or more.

2020 Income Thresholds by Filing Status and Age

The California Franchise Tax Board sets annual income thresholds to determine who must file a tax return. These limits depend on your filing status, age, and gross income. For 2020, the thresholds were:

Single or Head of Household: Under age 65 – $18,496; Age 65 or older – $24,696. These thresholds apply to taxpayers filing alone or those who qualify as head of household. If your gross income from all sources met or exceeded these amounts, you must file, even if no tax was owed.
Married/RDP Filing Jointly: Under age 65 – $36,996; one spouse 65 or older – $43,196; both spouses 65 or older – $49,396. Joint filers combine their income to determine if they meet the filing threshold. The higher limits for older taxpayers account for increased standard deductions.
Married/RDP Filing Separately: Under age 65 – $18,496; Age 65 or older – $24,696. Filing separately uses the same thresholds as single filers, but spouses only report their income and deductions. This status can sometimes result in higher overall tax liability.
Qualifying Widow(er): Under age 65 – $36,996; Age 65 or older – $43,196. This status applies for up to two years following the death of a spouse if you meet certain conditions, such as maintaining a home for a dependent child. It offers the same threshold benefits as married filing jointly for eligible taxpayers.

These figures are based on gross income from all sources. If your income meets or exceeds these amounts, you are required to file.

Filing Deadlines for 2020 Returns

Due to the COVID-19 pandemic, the filing and payment deadlines for 2020 were adjusted. The original due date of April 15, 2021, was extended to May 17, 2021. California also granted an automatic extension to file until October 15, 2021, without the need to submit a separate request. However, any taxes owed still needed to be paid by May 17, 2021, to avoid late payment penalties and interest.

Key 2020 Changes

Several changes made the 2020 California tax return different from prior years:

Expanded California Earned Income Tax Credit (CalEITC): Extended eligibility to taxpayers using an Individual Taxpayer Identification Number (ITIN).
Young Child Tax Credit: New credit for qualifying taxpayers with children under six.
Main Street Small Business Tax Credit: Offered to eligible small business employers impacted by COVID-19.
PPP Loan Forgiveness: California matched the federal government treatment, excluding forgiven Paycheck Protection Program loan amounts from taxable income.
Pass-Through Entity Tax Updates: Changes affecting income reporting for partnerships, S corporations, and LLCs taxed as partnerships.

These updates were intended to relieve taxpayers and businesses facing financial challenges during the pandemic while maintaining compliance with California tax laws.

Forms and Schedules You Will Use

Main Individual Income Tax Forms

Form 540 – California Resident Income Tax Return: Used by California residents with more complex tax situations, such as multiple sources of income, itemized deductions, or certain credits. This is the most common state tax return form for full-year residents.
Form 540 2EZ – California Resident Income Tax Return (Simplified): This form is specifically designed for residents who have straightforward finances, limited income types, and standard deductions. It is faster to complete, but it cannot be used if you have more complex tax reporting needs.
Form 540NR – California Nonresident or Part-Year Resident Income Tax Return: Required for individuals who lived in California for part of the year or earned income from California sources while living elsewhere. This form calculates tax only on California-source income for nonresidents.

Common Schedules and Supporting Forms

Schedule CA (540) – California Adjustments: Reports differences between federal and California taxable income and deductions. This is essential when items such as unemployment benefits, lottery winnings, or certain deductions differ between the federal return and California tax rules.
Schedule D (540) – California Capital Gain or Loss Adjustment: Used when your capital gain or loss amounts differ from what is reported on your federal return. This is common when California does not conform to specific federal rules.
Form 3514 – California Earned Income Tax Credit: Allows eligible taxpayers to claim the CalEITC, which can significantly reduce tax liability or result in a refund.
Form 3506 – Child and Dependent Care Expenses Credit: Claimed by taxpayers who pay for childcare or dependent care to work or look for work.
Form 3596 – Paid Family Leave Credit: For employers and self-employed individuals eligible for a credit based on paid family leave benefits.

Small Business and Self-Employment Forms

Form 540-ES – Estimated Tax for Individuals: Used by self-employed individuals and others with income not subject to withholding to make quarterly estimated tax payments.
Form 100 – California Corporation Franchise or Income Tax Return: Required for C corporations conducting business in California.
Form 100S – California S Corporation Franchise or Income Tax Return: Used by S corporations to report income, deductions, and credits.
Form 565 – Partnership Return of Income: For general partnerships, limited partnerships, LLPs, and multi-member LLCs, they are taxed as partnerships.
Form 568 – Limited Liability Company Return of Income: Filed by LLCs doing business in California that are not taxed as corporations.

Payment and Extension Forms

Form 3519 – Payment for Automatic Extension: Used to make a payment when you need more time to file but expect to owe tax. It ensures you avoid late payment penalties.
Form 3582 – Payment Voucher for Individual e-Filed Returns: Submit with a check or money order if you e-file but pay separately by mail.
Form 3586 – Payment Voucher for Corporation e-Filed Returns: Used by corporations that e-file their returns but make payment via check or money order.

These forms and schedules can be downloaded directly from the California Franchise Tax Board’s website. Ensure you use the correct and most up-to-date versions.

Step-by-Step: Completing Your 2020 California Return

Step 1: Gather Your Documents

Before starting your California tax return, collect your federal tax return, W-2s, 1099s, and records of any estimated tax payments. The Franchise Tax Board also recommends having Social Security numbers or ITINs, prior-year returns, and proof of deductions or credits. This preparation ensures taxpayers' smooth e-filing and accurate reporting.

Step 2: Enter Personal Information and Filing Status

On Form 540, include your full name, address, Social Security number, and occupation. Select the correct filing status to match your federal return unless California residency rules require otherwise. An accurate start prevents delays in processing your tax return or refund.

Step 3: Report Federal AGI and Adjust with Schedule CA

Transfer your federal adjusted gross income from your federal return to Form 540. Use Schedule CA to apply California-specific additions and subtractions, such as differences in taxable income or deductions. This step ensures your California tax return reflects state rules, not just federal government requirements.

Step 4: Calculate California AGI and Choose Deductions

After adjustments, determine your California AGI and choose between standard and itemized deductions. For 2020, the standard deduction was $4,601 for single filers and $9,202 for married/RDP joint filers. Selecting the right deduction can reduce the taxes you pay.

Step 5: Determine Taxable Income and Base Tax

Subtract deductions from your California AGI to get taxable income. Use the California tax tables or rate schedule to calculate your base tax. Enter any applicable credits to lower your final tax owed.

Step 6: Enter Payments and Figure Refund or Amount Due

Report all California income tax withheld, estimated payments, and extension payments. If you overpaid, request a direct deposit refund to your checking or savings account for faster processing. If you owe, the Franchise Tax Board offers multiple pay options, including Web Pay and credit cards.

Step 7: Sign, Date, and Submit Your Return

Both spouses must sign a joint return, and all filers should include a phone number for contact. Submit your return by e-file for faster service, or mail it to the correct address in the instructions on Form 540. E-filing through a free service like CalFile can speed up your refund and reduce errors.

How to File: E-File and Paper Options

Electronic Filing

Electronic filing is the fastest and most accurate way to submit your California tax return. The Franchise Tax Board offers CalFile, a free service for eligible taxpayers, and partnerships with the Free File Alliance for those with an adjusted gross income of $72,000 or less. Many taxpayers also use commercial e-filing software or authorized tax professionals, which can handle more complex situations. E-filed returns are typically processed within one to two weeks, with refunds deposited directly into your checking or savings account.

Paper Filing

Paper filing is available for those who prefer it or need to submit forms not supported by e-filing services. To file by mail, complete your California tax return forms, attach all required schedules and W-2s or 1099s showing California withholding, sign the return, and include any payment if applicable. While paper returns can take several months to process, they remain a valid option for taxpayers who do not use online filing.

Mailing Addresses for 2020 California Tax Returns:
- Without Payment (Form 540, 540 2EZ, 540NR): Franchise Tax Board, PO Box 942840, Sacramento, CA 94240-0001
- With Payment (Form 540, 540 2EZ, 540NR): Franchise Tax Board, PO Box 942867, Sacramento, CA 94267-0001
- Business Returns (Forms 100, 100S, 565, 568): Franchise Tax Board, PO Box 942857, Sacramento, CA 94257-0500 (without payment) or PO Box 942857, Sacramento, CA 94257-0501 (with payment)

How to Pay Your 2020 Tax

Payment Methods

Web Pay (Bank Account Payment): A free service from the California Franchise Tax Board that lets you pay directly from your account. Payments can be scheduled in advance, and this option provides immediate confirmation.
Credit Card Payment: This method is available through the Official Payments platform. While convenient, it includes a service fee (2.3% of the payment amount for 2020). Payments are processed immediately.
Check or Money Order: Make payable to “Franchise Tax Board” and write your Social Security number and “2020 Form 540” on the memo line. Use Form 3582 if paying separately from your California tax return.
Electronic Funds Transfer (EFT): Required for some businesses with large tax payments but available voluntarily for others. Payments are initiated through your financial institution.
FTB Mobile App: Available for iOS and Android devices, the app allows you to make payments via Web Pay, check your balance, and view payment history.

Payment Plans

Eligibility: You may qualify for an installment agreement if you owe less than $25,000, can pay the full balance within 60 months, and have filed all required tax returns.
How to Request: Apply online through the FTB payment plan page, by mailing Form 3567 (Installment Agreement Request), or by calling 800-689-4776.
Setup Fees: $34 for online requests and $55 for phone or mail applications. Interest will continue to accrue on the unpaid balance.

Key Payment Deadlines and Penalties

Deadline: Full payment for 2020 taxes was due by May 17, 2021, even if you filed later under the automatic extension.
Late Payment Penalty: 5% of unpaid tax plus 0.5% per month until paid, up to a maximum of 25%.
Interest: Charged on unpaid balances from the original due date until payment is received.

Track Your Refund or Balance Due

Check Your Refund Status

Online “Where’s My Refund?” Tool: Available on the California Franchise Tax Board website, the “Where’s My Refund?” tool lets you check your refund status 24/7. You will need your Social Security number or ITIN and the exact refund amount from your California tax return.
FTB Mobile App: Downloadable for iOS and Android, the app includes a refund status feature and secure account access.
Automated Phone System: Call 800-338-0505 any time and follow the prompts to check the status of your refund without speaking to a representative.
Live Representative: Call 800-852-5711 from 8 a.m. to 5 p.m., Monday through Friday, Pacific Time. Be prepared for longer wait times during peak tax season.

Typical Processing Times for 2020 Returns

Processing times vary depending on whether you submit your California tax return electronically or by paper and choose direct deposit or a paper check for your refund. Electronic filing through the Franchise Tax Board is much faster than mailing paper forms, especially if you use direct deposit.

E-Filed Returns with Direct Deposit: Refunds are typically issued within 2 weeks. This is the fastest option recommended for taxpayers who want their money quickly and securely deposited into a checking or savings account.
E-Filed Returns with Paper Check: Refunds usually arrive within 3 weeks. While slightly slower than direct deposit, this option is still faster than paper filing and allows you to receive a physical check from the state.
Paper Returns with Direct Deposit: Processing can take up to 3 months. Even though direct deposit is used for payment, mailing your forms means the Franchise Tax Board takes longer to receive and review your return.
Paper Returns with Paper Check: Refunds may take up to 4 months. This is the slowest method because the tax return and the payment are handled entirely through the mail.

Processing may take longer if your return has errors, is incomplete, or includes credits requiring special review. Filing close to the tax deadline can extend processing times due to high volumes.

Check Balances and Notices

MyFTB Account: Create an account at the FTB website to securely view your tax balance, payment history, and recent notices. You can also make payments and set up a payment plan directly from your account.
Customer Service Assistance: Call 800-852-5711 during business hours to confirm balances or address questions. Your Social Security number, tax year, and notice details are ready for faster service.

Final Filing Checklist

Verify Personal Information: Make sure your name, address, and Social Security number or ITIN are correct on all forms to prevent delays in processing your California tax return.
Confirm Filing Status: Match your filing status to your federal tax return unless you have a valid reason to use a different status on your California return.
Report All California-Source Income: Include all income earned in California, even if you lived in another state for part of the year.
Apply Adjustments Correctly: Use Schedule CA (540) to record California-specific additions and subtractions to your income.
Document Credits: Have all forms ready for credits like CalEITC, Young Child Tax Credit, or renter’s credit.
Check Math and Tables: Recalculate totals and use the correct California tax tables to avoid errors.
Sign and Date the Return: For paper returns, both spouses must sign if filing jointly.
Attach Required Forms: Include W-2s, 1099s, and any documents showing California tax withholding.
Include Payment Voucher if Needed: Use Form 3582 if paying by check or money order.
Use the Correct Mailing Address: Follow the Franchise Tax Board’s instructions for returns with or without payment.
Make a Copy for Your Records: Keep a complete set of your return and all attachments.
Consider Certified Mailing: This provides proof of timely filing, especially near the deadline.
Retain All Documents: Save W-2s, 1099s, and any schedules used for your return, even if you e-filed.
Save E-File Confirmation: Keep the acknowledgment number from your electronic submission for your records.
Pay on Time: If paying separately from e-filing, ensure payment is sent by the due date to avoid penalties.
Track Refund Status: Use the FTB’s online tool or mobile app to check your refund’s progress.
Keep Payment Confirmations: Store proof of all payments made toward your California taxes.
Respond to Notices Promptly: Contact the Franchise Tax Board quickly if you receive any correspondence to avoid additional issues.
Retain Records for Four Years: Keep your returns and supporting documents for at least four years, or longer for property transactions.

Frequently Asked Questions

What if I missed the May 17, 2021, filing deadline and the October 15 automatic extension for my 2020 return?

If you missed both deadlines, you should file your California tax return as soon as possible to reduce penalties and interest. The Franchise Tax Board applies a late filing penalty of 5% of unpaid monthly taxes, up to 25%. Note that filing promptly, even after the deadline, can help limit these costs and prevent further collection actions.

Can I file my California return for free, and who qualifies for CalFile or Free File Alliance?

Yes, many taxpayers qualify for free filing. CalFile is a free service from the Franchise Tax Board with no income limits that covers most common tax situations. The Free File Alliance allows eligible taxpayers with an adjusted gross income of $72,000 or less to prepare and e-file both federal and California tax returns at no cost. Always use the official FTB website to access these services.

Which deductions and credits are most commonly missed by California taxpayers?

Commonly overlooked credits include the California Earned Income Tax Credit (CalEITC), the Young Child Tax Credit, the renter’s credit, and the child and dependent care expenses credit. Some taxpayers also miss deductions for student loan interest, educator expenses, and self-employed health insurance premiums. For example, many self-employed individuals forget to claim the health insurance deduction, which can reduce taxable income.

Does an extension to the file also extend the time to pay for 2020, and how do penalties and interest work?

An extension to file your California tax return—such as the automatic October 15, 2021 extension—only gives you more time to submit paperwork, not to pay taxes owed. Payment was still due by May 17, 2021. Late payment penalties are 5% of the unpaid tax plus 0.5% per month, and interest accrues from the original due date until the balance is paid.

Should we file jointly or separately if I moved mid-year or if my spouse lives in another state?

This depends on your residency and income sources. Suppose one spouse is a California resident and the other is a nonresident. In that case, you can file jointly using Form 540NR or separately with the resident spouse using Form 540 and the nonresident using Form 540NR. Filing jointly may lower your total tax, but all worldwide income is reported, with California taxing only the California-source portion for nonresidents.

How did California treat 2020 unemployment benefits and PPP loan forgiveness compared to federal rules?

California taxes all unemployment benefits as income, unlike the federal government, which excluded up to $10,200 for certain taxpayers in 2020. Forgiven Paycheck Protection Program (PPP) loans are not taxable in California, and related expenses remain deductible. These differences require adjustments on Schedule CA (540) to ensure your California tax return accurately reflects state-specific income and deduction rules.