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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience:  15years with H & R Block. Divisional leader, Instructor
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I received a letter from the State of CA , Franchise Tax

Customer Question

Hi Pearl, I received a letter from the State of CA , Franchise Tax board for a personal tax return of 2012
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: There was certain unreinmbursed employee expense that I & my wife had claimed in the joint returns amounting to 20000
JA: Is there anything else the Accountant should be aware of?
Customer: The IRS now wants a copy of my employers policy or contract on expense reimbursement
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.
Submitted: 6 months ago.
Category: Tax
Expert:  Robin D. replied 6 months ago.

Hello

If the letter came from CA FTB then it is CA that is requesting the information.

The Franchise Tax Board (FTB) may request information from you regarding your California income tax return within the California statute of limitations period, which is usually the later of four years from the due date of the return (2017 April) or the date the return is filed.

You will need to supply them with the reimbursement information or they could remove the deduction. You need to request the policy statement from your employer for 2012. The employer would be able to substantiate their policy on reimbursements.

I suggest you also pull out your receipts for the expense you claimed. The $20000 is an amount that would have drawn the attention of the CA FTB but as long as you supply them with the policy (how the company reimburses) and you have records to substantiate the amount you should be fine.

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Expert:  Robin D. replied 6 months ago.

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Customer: replied 6 months ago.
Follow up to the last question: CA FTB is refering to Schedule A line 27 of my returns.
Neither me nor my wife work for the company we use to in 2012 anymore. N I have no way of being able to produce the documents from 2012 required. What are my options? I am ready to pay the amount due. But IRS hasn't told me about what amount I owe them. I just don't want any blot on my record. Whats the best way forward here. Should I wait for the Notice of proposed assessment? Or what is the best next step forward.
Expert:  Robin D. replied 6 months ago.

If you kept your receipts for the deductions then make copies and send those back to CA FTB. CA will not assess any additional tax until you have had the time to respond.

If you kept no records with your 2012 tax return then do an amended return removing that $20,000 and you will know the additional tax.

Those are your options, either produce your copies of receipts which show you were not reimbursed for the amounts you claimed or amend that CA return and remove the deduction.

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Expert:  Robin D. replied 6 months ago.

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