Self-employment tax: nonconforming California.

• Position: Its own way

Though the federal 2010 Tax Relief Act increased the amount of self-employment tax that may be deducted in computing federal adjusted gross income, California has not conformed to this change. For state income tax purposes, taxpayers may only deduct 50 percent of the self-employment tax paid in computing state adjusted gross income. Self-employed taxpayers who have already filed a return using the higher federal rate do not need to file an amended return.

To reduce taxpayer burden, the FTB is sending a letter...