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August 22, 2006 > Audits commence for Head of Household tax filers

Audits commence for Head of Household tax filers

by Denise Azimi

The Franchise Tax Board (FTB) is sending more than 150,000 audit letters to individuals who filed their 2005 tax returns using the head of household filing status, according to the FTB.

"This tax status is designed to help heads of household by placing them in a lower tax bracket with a higher standard deduction. This is a good program that helps those who can really use a break," said State Controller and FTB Chair Steve Westly.

The advantages to filing as head of household are lower tax rates and a higher standard deduction than the single filing status. It is intended to help unmarried people who provide a home for a qualifying person, typically their child. New this year is that California conforms to federal law changes including the "uniform definition of a child." Individuals that qualified for head of household in the past may find that they no longer qualify.    

"Of the 14 million tax returns filed in California each year, nearly 2 million California taxpayers take advantage of this filing status to reduce their taxes. The FTB provides many tools on its Website to help taxpayers who may have questions regarding their eligibility for this filing status," said Board of Equalization Chair and FTB Member John Chiang.

The FTB strives to complete these audits soon after the returns are filed in order to correct taxpayers before they file their 2006 returns next spring. Taxpayers who e-file their tax return may want to complete a head of household questionnaire. Those who submit the questionnaires are less likely to be audited for this beneficial tax filing status.

The FTB reviews head of household returns because the rules for it are often misunderstood. Many people consider themselves the "head of their household" but they do not meet the law's requirements. Last year, the FTB determined that more than 30,000 taxpayers did not meet the requirements for this filing status. Taxpayers who do not qualify for the head of household filing status will have their tax reassessed at either the single or married filing separate filing status. Taxpayers who do not respond to the letter may get penalties. Last year, this audit program resulted in $35 million in tax assessments.

For taxpayers who feel that their tax issues were handled unfairly, the FTB has a Taxpayer Advocate Office available to provide an independent review of your unresolved tax problems. The FTB strives to ensure that your concerns are handled promptly and fairly, and that you have the highest confidence in the integrity, efficiency, and fairness of our state tax system.

You can contact FTB at (800) 338-0505 to request FTB's Publication 1540, which is available in both English and Spanish. For more information about the head of household filing status, visit the FTB's Website at Under the link "Tools" is a heading "Head of Household" which has information including a self-test to help determine if you qualify for the head of household filing status.

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