FTB 2020 Tax Return Changes

Two important updates affecting the 2020 filing season were posted to FTB’s website this week.
Advance Child Tax Credit (CTC) Payments
The first update explains changes to 2020 tax returns, including how federal adjusted gross income (AGI) is calculated when someone received unemployment compensation, and how that may affect qualifying for California credits. If a taxpayer received unemployment insurance, the American Rescue Plan Act of 2021 reduced their federal AGI for their 2020 tax return. This means they may now qualify to receive more money from California tax credits, including:

  • California Earned Income Tax Credit (CalEITC);
  • Young Child Tax Credit (YCTC); and
  • The Golden State Stimulus payment.
This update also addresses the treatment of income received from a Medicare waiver or In-Home Supportive Services (IHSS) with regard to possibly qualifying for the CalEITC and other credits.
In-Home Support Services and CalEITC
The second update alerts 2016 filers that their nontaxable IHSS income may now be included as earned income for CalEITC. This change resulted from the Office of Tax Appeal's precedential opinion in the Appeal of F. Akhtar and M. Akhtar, which became final on Thursday, May 5, 2021.
This update provides important information for taxpayers who want to file a timely claim for refund for the CalEITC, for the 2016 tax year. FTB has a process in place for 2016 filers to file a protective claim for this year. This is especially important for those taxpayers whose statute of limitations to file a timely claim for refund expires on May 17, 2021.