California is providing tax relief during the pandemic.

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Extended filing deadline

The California Department of Tax and Fee Administration (CDTFA) is providing a three-month extension for individuals and businesses to file and pay their taxes and fees originally due between December 15, 2020, and April 30, 2021. Taxpayers reporting less than $1,000,000 in taxes and fees on a return originally due during this period are not required to seek an extension from CDTFA. Relief will be automatically provided.

Individual taxes

The California Earned Income Tax Credit and Young Child Tax Credit are now available to taxpayers who have an Individual Taxpayer Identification Number (ITIN). These tax credits can be claimed on 2020 individual tax returns (which are filed in 2021).

You can also use your 2019 income to claim the federal Earned Income Tax Credit and Child Tax Credit on your 2020 taxes. This lets you claim these credits even if your income was lower in 2020 due to job loss or underemployment.

Small business taxes

California and the federal government are providing tax assistance and benefits to small businesses. This includes:

  • The Small Business Hiring Tax Credit, a $1,000 tax credit for each new employee hired by small businesses (up to $100,000 per business)
  • Interest-free deferral of sales/use tax up to $50,000 for businesses with less than $5 million in taxable sales
  • Excluding forgiven Paycheck Protection Program loans from state gross income
  • The federal Employee Retention Tax Credit, available through July 1, 2021, of up to $14,000
  • Federal tax credits to small businesses for COVID-19 employee paid leave

Questions and answers

Small business sales and use tax deferral

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