CA Tax refunds - Spidell

CA Tax refunds

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Message Board CA Tax refunds

This topic contains 2 replies, has 2 voices, and was last updated by Renee Rodda 1 week, 4 days ago.

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  • #179504
    Robin Johnson
    Participant

    I have a client who is finally divorced. The court order stated 2018 was last year to file MFJ.  Filing ensued. There was a refund on the State return that was to be split in two accounts.  Which it was. The TP received a letter stating there was an adjustment by the FTB for a 1500.00 additional refund (an estimate made with the extension for 2018 that I was unaware of).

    I called the FTB PPS and was advised that any difference in refund would automatically be deposited into the 2nd bank account recorded on that return. Subsequently was advised that if the change was a balance due, it would go to the 1st bank account recorded on that return.  She further stated that this has been the rule for many years. I asked where I could find that in writing and she directed me to the website. However, there is nothing that states that at all. I’ve been preparing taxes for 24 years and this is the first I’ve ever heard of this.

    I’ve looked for the last 2 hours on the website. Can any clarification be provided on this, please?

     

  • #179654
    Renee Rodda
    Participant

    I have reached out to our contact at the FTB on this issue, and will get back to you.

  • #179660
    Renee Rodda
    Participant

    Here is the information on how the FTB handles refunds from returns with multiple accounts.

    If a taxpayer has requested a refund to be deposited into two accounts (split), and there is an adjustment to the refund:

    • If an adjustment to the taxpayers return results in a larger refund, FTB will add the difference to the second account listed on the return.
    • If an adjustment to the taxpayers return results in a smaller refund, FTB will deduct the difference from the second account listed on the return. If the difference exceeds the amount requested for the second account, FTB will then deduct the remainder from the first account.

    Keep in mind the community nature of the assets isn’t the FTB’s responsibility, which is an issue we have always seen with joint estimates and MFS returns. The first taxpayer to file gets the credit for the estimates. Unfortunately it is an issue that must be handled between the former spouses.