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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I just recieved a Notice of Proposed Assessment from the state

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I just recieved a Notice of Proposed Assessment from the state of California. It states that they propose to assess additional tax on my account for the 2009 taxable year. The reason is "You did not provide substantiation for the income adjustments claimed on your Schedule CA (540), Califonia Adjustments - Residents" I am not too sure what this means. Can I get help demistifying this?

LEV :

Hi and welcome to Just Answer!
Please provide additional information about your adjustments.
Here is Schedule CA (540) fo 2009 - https://www.ftb.ca.gov/forms/2009/09_540ca.pdf
Please take a look at your 2009 tax return and post here line numbers and amounts in each column.
I will help you to determine the exact reason.

Customer: I am pulling out the files now...
LEV :

Sure - take your time. I may need to ask additional questions - so keep your tax documents handy.

Customer: I have it out.
Customer: Can I snap a picture of it and email you?
LEV :

I may not accept email from you. However - you may place an image here.

Customer: Sweet. Just a second.
LEV :

Sure - take your time. Be sure remove all personal information.

Customer: I'm using my iPhone at the moment. I don't see a way to upload my picture. I'll just start typing.
LEV :

it is OK.

Customer: 01 2
Customer: 01 2, 72 0, 408 0, APE 0
Customer: 06 0, 73 0, 409 0, FS 0
Customer: 09 0, 74 0, 410 0, 3800 0
Customer: 10 0, 75 0, 411 0, 3803 0
Customer: 12 54668, 76 0, 412 0, SCHG1 0
LEV :

I am not clear... I need only form Schedule CA (540) fo 2009,
It starts with line 7 - what do you have on line 7?

Customer: 14 0, 77 0, 413 0, 5870A 0
Customer: Oh. Let me see. Sorry.
Customer: 196
LEV :

form Schedule CA (540) for 2009 - there are three columns:
- line 7 (A)=196; (B)= zero (C)=zero - is that correct?

Customer: No. Just says "7 [2] x 98 = $196"
Customer: I filed this married Jointly.
LEV :

I suspect that you are looking at a different form.
I am asking about this form - https://www.ftb.ca.gov/forms/2009/09_540ca.pdf
Please take a look at this form - and find it in your tax return.

Customer: Im looking at form " 540 C1 2009"
Customer: I filed with TaxSlayer.com. If that helps.
Customer: Line 7 is under "exemptions."
Customer: That year- I was an Ohio resident and my Husband is a California resident.
LEV :

You wrote - The reason is "You did not provide substantiation for the income adjustments claimed on your Schedule CA (540), Califonia Adjustments - Residents"
I just need to see that form... Do you have it?

Customer: I don't have it I guess. I had printed it all out, but I don't see it here.
LEV :

which forms do you have with your 2009 tax return? Just list all forms.

Customer: W-2s, 1040EZ, 8453-OL, 540 C1 sides 1 & 2, CA form 3582, and Ohio IT 1040.
LEV :

At this moment - we only looking at CA tax forms...
So - you used only form 540 - which is California Resident Income Tax Return.
3582 is Payment Voucher and 8453 is e-file Return Authorization - so we would not look at these forms.
As you told that you were a nonresident - you should not use form 540 for your joint tax return - but instead - should use form 540NR - here how it looks - https://www.ftb.ca.gov/forms/2009/09_540nrlong.pdf
Please verify if you actually used form 540 or 540NR?

Customer: As stated, "540 C1 2009"
Customer: I had help with this, but I didn't know about that. But it shouldn't matter, I was (and he was) Active Duty military.
LEV :

If you were Active Duty military - your residency is based on you home of record?

Customer: Right. Mine was OH and his CA.
LEV :

As stated, "540 C1 2009" - I guess that you filed form 540NR - here how it looks - https://www.ftb.ca.gov/forms/2009/09_540nrlong.pdf - Please verify if you actually used this form?

Customer: I did not.
LEV :

Is this the form that you used - https://www.ftb.ca.gov/forms/2009/09_540.pdf

Customer: Correct.
LEV :

If you want to claim yourself as a nonresident - you need to use form 540NR - seems that was the issue...
Form 540 that you used is for residents only.

Customer: Figures I'd screw up a tax return. Is there a way to fix this...like H & R block or somebody?
LEV :

Any tax preparation service may help. What you need to do - amend your CA tax return - form 540X.
And be sure to attach form Schedule CA (540NR) - and subtract your income from total because you were nonresident in 2009.

LEV :

I will give you references to these forms. just a sec...

Customer: Thank you so much. It's appreciated. I'll get on this. Have a great day.
Customer: Ok
Customer: Wonderful. Thank you.
LEV :

Get the 540NR Tax Booklet for nonresidents or part-year residents, including all its forms, schedules, and instructions - https://www.ftb.ca.gov/forms/2009/09_540nrbk.pdf

LEV :

To summarize - you prepare your tax return as if you both are residents - but included only income of your spouse. To correct the issue - you need to use form 540NR - report all income and then - adjust it by subtracting your income - that is the purpose of Schedule CA (540NR).
So seems as there was a mistake - and here the way to correct it.

Lev and other Tax Specialists are ready to help you