The California Franchise Tax Board (FTB) recently announced their conformity and non-conformity to the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. Some important highlights are:
The stimulus checks from the federal government enacted under the CARES Act (set to be issued the week of April 13th) will not be subject to California income tax.
The emergency increase in unemployment compensation benefits (an additional $600 per week) will not be subject to California income tax. As a reminder, standard unemployment benefits are fully taxable as ordinary income at the federal level, but not by the State of California.
California is not conforming to the modified net operating loss (NOL) carryback rules. Under the CARES Act, Federal NOLs arising from tax years beginning after December 31, 2017 and before January 1, 2021 may be carried back 5 from the tax year they arise. However, California’s carryback period will remain at 2 years.
California is conforming to the waiver of the early withdrawal penalty from qualified retirement accounts under the CARES Act.
You can read the FTB’s frequently asked questions about COVID-19 here: https://www.ftb.ca.gov/about-