The state of CA just announced that their tax revenue for the 2018 tax year was way higher then expected. There are 2 main law changes that this can be attributed to, but 1 primary reason, BAD TAX PREPARATION!!
In the 2018 tax year the federal tax law changed so the standard deduction was nearly doubled in all cases. Also the federal tax law excluded all dependents in border country’s other then citizens or legal residents living abroad. But contrary to popular belief these changes did not apply to the state of CA.
What we are seeing is many many people had either mis-informed or lazy tax professionals file there return. They did not qualify to itemize under the federal deduction limit and then just did not input the Itemized Deductions even though it would have made a massive difference on the CA State return. We did not do this here at Palmer and are seeing our clients having significantly higher state refunds for this reason.
The Second situation is individuals who lost claiming dependents in Mexico and Canada. This change made a colossal difference in federal returns this year but should not have made a bit of difference on the state refund. Once again prepares removed them entirely instead of just opting out of the dependent tax credit and still receiving the deduction on the state side.
So if you, or someone you know owns a house. Have them make sure there preparer claimed the itemized deduction. If they did not, reach out to us about amending the return. Although it did not have an effect on the federal return they could be missing out on hundreds or Thousands of dollars on the state refund.
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