Credit for Child Adoption Costs-Code 197 for California State Taxes

Credit for Child Adoption Costs — Code 197

If you have adopted a child, you can claim a credit upto 50% of the adoption cost. You can claim this credit on your California State tax return (Form 540, Form 540 NR(long or short)) with credit code 197.

Your allowable credit is $2500 per childern and you can carry over the excess credit to future years.

There are certain rules to claim this credit on your california return and they are as below.

For the year in which an adoption decree or an order of adoption is entered (e.g., adoption is final), claim a credit for 50% of the cost of adopting a child who was both:

• A citizen or legal resident of the United States.
• In the custody of a California public agency or a California political subdivision.

Treat a prior unsuccessful attempt to adopt a child (even when the costs were incurred in a prior year) and a later successful adoption of a different child as one effort when computing the cost of adopting the child.

Include the following costs if directly related to the adoption process:

• Fees for Department of Social Services or a licensed adoption agency. 
• Medical expenses not reimbursed by insurance.
• Travel expenses for the adoptive family.

Note:

• This credit does not apply when a child is adopted from another country or another state, or was not in the custody of a California public agency or a California political subdivision.
• Any deduction for the expenses used to claim this credit must be reduced by the amount of the child adoption costs credit claimed.

Use same calculation shown bleow for each adoption. The maximum credit is limited to $2,500 per minor child.

1. Enter qualifying costs for the child . . . . . . . . . 1 _______

2. Credit percentage — 50%  . . . . . . . . . . . . . . . 2 _______x .50

3. Credit amount. Multiply line 1 by line 2.

     Do not enter more than $2,500 . . . . . . . . . . . 3 _______

Your allowable credit is limited to $2,500 for 2009. Carry over the excess credit to future years until the credit is used.

 
All the information are taken from California Government Website(http://ftb.ca.gov/). Please refer the instruction before claiming this credit on your state tax return.

What is Nonrefundable Renter's Credit and how do I qualify for it?

California support personal income tax credit such as Non Refundable Renter's credit. If you paid rent for more than six months on your principal residence and meet the criteria listed below than you are liable to claim Renter's credit( $60 to $120) as per your filing status.

The Nonrefundable Renter's Credit is a personal income tax credit that can only be used to offset your tax liability; therefore, you must have a tax liability to claim the credit.

You can report this credit directly on all main form [Form 540/Form 5402EZ/Form 540NR].

You qualify for the Nonrefundable Renter's Credit if you meet all of the following:

1. You were a resident of California in 2009.
2. Your California adjusted gross income (AGI) is $34,412 or less if your filing status is single or married/registered domestic partner filing a separate return; or $68,824 or less if you are married/registered domestic partner filing jointly, head of household, or qualified widow(er).
3. You paid rent for at least half of 2009 for property in California that was your principal residence.
4. You did not live with another person for more than half the year (such as a parent) who claimed you as a dependent in 2009.
5. You are not a minor living with and under the care of a parent, foster parent, or legal guardian.
6. You rented property for more than half the year that was not exempt from California property tax in 2009.
7. If you are married, neither you nor your spouse/registered domestic partner was granted a homeowner's property tax exemption during 2009. (You can still qualify for the credit, even though your spouse/registered domestic partner claimed a homeowner's exemption, as long as each of you maintained a separate residence for the entire year in 2009).

If you meet the requirements above the credit is:

• Single, $60
• Head of Household or widow(er), $120
• Married/registered domestic partner filing separately, $120
• Married/registered domestic partner filing jointly, $120

 All information is taken from California Government website. [http://www.ftb.ca.gov/individuals/faq/ivr/203.shtml]