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California Preparers: 20 Hour Continuing Education Deadline – October 31st

Tax News

President Donald Trump’s proposed FY 2018 budget for the federal government was released on Tuesday May 23, 2017.  One of the most important proposed changes to many of our members includes a proposal to authorize the IRS to regulate all paid tax return preparers.

The budget proposal calls for giving the IRS “statutory authority to increase its oversight of paid tax return preparers.” The proposal would be effective upon enactment. The budget says this will decrease the “need for after-the-fact enforcement of tax laws and increase the amount of revenue that the IRS can collect.” Estimates are the proposal will increase revenue by $259 million in the years 2018–2027. An attempt by the IRS to regulate unenrolled tax return preparers was struck down by a federal court in 2013.

IRS News Release


WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry today warned tax professionals to beware of phishing email scams claiming to be from IRS e-Services and of schemes in general as the April 18 deadline nears.

Acting as the Security Summit, the IRS, state tax agencies and the tax industry warned that this time of year is the high season for identity thieves scams to steal sensitive data from tax professionals. All tax preparers and their employees must be on guard against phishing activities.



HSAs are confusing as is, but in California they can be even more complex. The rules are different for the IRS and for the Franchise Tax Board. Let's take a look at how it works:


Health Savings Account (HSA) Contributions


Differences Between Federal and California Law


Contributions Federal law allows taxpayers a deduction for contributions to an HSA account. Contributions made on behalf of an eligible individual by an employer are excluded from W-2 wages. California does not conform to this provision.


What to do for California


Enter the amount from Schedule CA (540 or 540NR), column A, line 25, in column B, line 25. Enter the amount of any employer contribution from federal Form W-2, line 12, code W on Schedule CA (540 or 540NR), line 7, column C. 


Health Savings Account (HSA) Distributions


Differences Between Federal and California Law


Distributions that are not used for qualified medical expenses are includible in federal gross income. The amount taxable under federal law, less interest and dividend income previously taxed by California, is not taxable by California.


What to do for California  


Enter the required adjustment from Schedule CA, line 21f, column A, in line 21f, column B.



For more information, please see FTB Publication 1001 Page 10




Preparers are a special target for cybercriminals, a security expert told tax professionals during a recent webinar on cyber-security.

“You have to do what you have to do to protect your business,” host Jake Solis, co-CEO of the IT consultancy 1+1 Technology, said during the webinar, “Cyber Security Breach Prevention and Response,” which was presented by the Latino Tax Professionals Association.

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If you receive Social Security benefits, you may have to pay federal income tax on part of your benefits.

How do I know if I have to pay income tax on my benefits?

It depends on how much total income you report to the IRS.


IR-2017-61, March 15, 2017



WASHINGTON — The Internal Revenue Service today granted many businesses affected by this week’s severe winter storm additional time to request a six-month extension to file their 2016 federal income tax returns.  The IRS is providing this relief to victims and tax professionals affected by this week’s storm (known as Winter Storm Stella) that hit portions of the Northeast and Mid-Atlantic.



Business taxpayers who are unable to file their tax return by today’s due date (March 15, 2017) can request an automatic extension by filing Form 7004, available on, on or before March 20, 2017. Form 7004 provides a  six-month extension for returns filed by partnerships (Forms 1065 and 1065B) and S corporations (Forms 1120S).



Eligible taxpayers taking advantage of this relief should write “Winter Storm Stella” on their Form 7004 extension request (if filing Form 7004 by paper).  As always, the fastest and easiest way to get an extension is to file this form electronically. 




The IRS will continue to monitor conditions and provide additional relief if circumstances warrant.