Listed below, are the subtractions from income that are available on your California return:
California Lottery Winnings
Do not enter lottery winnings from other states.
IRC Section 965 Deferred Foreign Income
If you entered IRS deferred foreign income on your federal return you may subtract that amount on the California return.
Global Intangible Low-Taxed Income (GILTI) Under IRC Section 951A
If you entered GILTI on your federal return you can enter a subtraction from income
Excess Business Loss
California does not conform to federal law regarding the disallowance of excess business loss.
Parent's Election to Report Dividend or Interest Income from Children
Under Age 19 or Students Under Age 24 - included on the parent’s or child’s federal tax return and reported on the California tax return by the opposite taxpayer. If the amount of your child's income you reported on your return is different than what is listed on the federal return either the difference in appropriate column.
Reward from Crime Hotline
You cannot take this subtraction if you are an employee of the hotline or a sponsor for the hotline reward.
Native American Earned Income Exemption - California does not tax federally recognized tribal members living in California Indian country who earn income from any federally recognized California Indian country. Military compensation is considered income from reservation sources. Enrolled members who receive reservation sourced compensation must reside in their affiliated tribe’s Indian country to qualify for tax exempt status.
Beverage Container Recycling Income
Enter income received from recycling beverage containers.
Rebates or Vouchers from a Local Water Agency, Energy Agency, or Energy Supplier
Enter any income received in rebates or vouchers from any of the above agencies or suppliers.
Financial Incentive for Turf Removal
Enter any income received for rebates, vouchers or other financial incentives from a local water agency or supplier in a turf removal conservation program.
Financial Incentive for Seismic Improvement
Enter any income for loan forgiveness, grant, credit, rebate, voucher issued by the California Residential Mitigation Program or California Earthquake Authority to assist a residential property owner with expenses incurred for earthquake loss mitigation.
Original Issue Discount (OID) Issued in 1985 & 1986
In the year of the sale, you will need to know the difference between the amount for federal purposes and the amount reported for CA purposes.
- OID Holders: Enter the difference between the amount included in your federal AGI and the amount included for CA purposes as an addition to income.
- OID Issuers: Enter the difference between the amount deductible on your federal return and the CA deductible amount as a subtraction from income.
Foreign Income on Nonresident Aliens
You must adjust federal income to reflect income earned world-wide under CA law. If you have losses from foreign sources, enter them as a subtraction.
Cost-Share Payments Received by Forest Landowners
Enter any cost-share payments received from the Department of Forestry and Fire Protection under the California Forest Improvement Act of 1978 or from the U.S Department of Agriculture, Forest Service, under the Forest Stewardship Program and the Stewardship Incentives Program, pursuant to the Cooperative Forestry Assistance Act.
Coverdell ESA Distributions
If you received a distribution from a Coverdell ESA, report the difference between the federal taxable amount and the California taxable amount
Grants Paid to Low Income Individuals
CA excludes grants giving to low income individuals for the purpose of constructing or retrofitting buildings in order to make them more energy efficient.
HSA Distributions Not Used For Qualified Medical Expenses
California does not tax distributions from an HSA that were not used on qualified medical expenses. These distribution amounts can be entered as a CA subtraction.
California National Guard Surviving Spouse & Children Relief Act of 2004
Benefits received as a surviving spouse for military personnel killed in the performance of duty is not taxed by California. For the purpose of this subtraction, military personnel include CA National Guard, State Military Reserve, or the Naval Militia.
Ottoman Turkish Empire Settlement Payments
If you received settlement payments as a person persecuted by the regime that was in control of the Ottoman Turkish Empire from 1915 until 1923 your gross income does not include those excludable settlement payments. Enter the payments received as a subtraction to income to the extent they were included on your federal return.
For further information on these items, please see Schedule CA 540