After you file

Since the FTB has already reached out, you are essentially correcting your filing. Here is how to handle it:

1. Complete Form 3853 first: If you had insurance all year, you'll simply check the "Full Year" box for everyone in your household. This usually brings the penalty to $0.
2. Update Form 540: Ensure the "Health care coverage" box is now checked (or the penalty line is correctly filled out based on your 3853 results).
3. Reply with the 3853 and revised 540:
   1. If your notice has a DLN: You can use the FTB's Respond to Notice web portal.
   2. If you have a MyFTB account: You can log in and send a secure message with the forms attached. If you don't have an account, it takes about a week to set up because they mail you a PIN for security
   3. If the notice specifically says "Mail to...": Some specific audit or compliance codes still require the paper trail. If the notice doesn't mention an online option, mailing is the safest bet to ensure it gets processed. Include a copy of the notice and mail certified with a return receipt, no signature required. This is your proof, in case CA says they did not receive it. Which is why you never mail original forms.