FEDERAL TAX CREDIT IS FREE FROM CALIFORNIA TAX.

• Position: Brief Article

Is the federal advance refund or tax credit under IRS Sec 6428 subject to California income tax? No, says the FTB

In Legal Ruling 2001-3, the FTB states that the advance tax refund is considered an overpayment of federal income tax. Refunds or abatements of federal income taxes constitute a return of capital. The return of capital does not constitute income, as there is no...