How do I waive the California franchise tax first year?

Forum|Forum|7 years ago
May 31, 2019
5 replies
4 views

I'm hoping to submit my taxes for 2013 (late) and it was my first year of doing business by a few weeks. Where does Turboxtax show the option to mark and waive the first year franchise tax? I've seen several of these questions on the board and none have been answered.

TurboTax Business Windows

Best answer by SweetieJean

Please see this thread, including the screenshots in it:

https://ttlc.intuit.com/questions/2335321-why-would-i-owe-ca-franchise-tax-800-in-first-year-and-a-n...

Be sure your 2013 CA software is updated.

TomYoung

Alumni - Champ

As far as I know it's not a "waiver" in the sense that you have to ask or apply for it.

Pub 1060 states:
---------------------------------------------------------------
Newly Incorporated or Qualified Corporation Exception

Newly incorporated or qualified corporations are not required to pay the minimum franchise tax in their first
taxable year.
---------------------------------------------------------------

I would think that the TTBusiness California program should "know" this and handle it correctly.

I'm not sure what you mean by " it was my first year of doing business by a few weeks." It seems like it is, or it isn't.

mjohnson11_2Author

Level 2

TTBusiness California didn't handle it which is why I'm here. Got to the end and says I owe the minimum franchise tax fee that I'm trying t waive. Still at a loss.

I incorporated 12/4/13. The 15 day rule didn't apply so I'm forced to submit a return for that year.

SweetieJean

Answer

Alumni - Champ

Please see this thread, including the screenshots in it:

https://ttlc.intuit.com/questions/2335321-why-would-i-owe-ca-franchise-tax-800-in-first-year-and-a-n...

Be sure your 2013 CA software is updated.

pshah

Level 2

this link doesnt work, i am in the same situation of how to configure turbotax for first years of operation in ca

taiweile

Level 2

I would like to follow with this question because I got the same problem for 2021 with TurboTax. I only set up and run my s Corp starting Oct. 2021, but in the final printed paperwork it show the brochure for $800 franchise fee. I think the first year of a new established company will be exempted from franchise fee.

GeorgeM777

Level 11

This matter is being investigated. However, while this matter is under review, what is the underlying character of your business. For example, are you a single member limited liability company, a limited partnership, or a limited liability partnership?

@taiweile

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taiweile

Level 2

Thank you for quick reply, my company is a Inc. (S corporation) not a LLC or any other type. It is a small business, and only 2 shareholders. Thanks

@GeorgeM777

firebytes

Level 2

I am having the same issue for 2021 taxes. How do I make Line 3 of CA Form 568 $0?? First year payment is waived!

DaveF1006

Level 15

The $800 fee is correct. In reading this Turbo Tax post written by GeorgeM777, you would have been required to pay a LLC franchise fee in 2021 within 2-3 months after you formed your LLC. You would need to pay again on April 15, 2022. This resulted in back-to-back payments, which provided a hardship for LLC business owners that formed their LLC in the last quarter of the tax year. This was the result of Assembly Bill 85.

So to avoid this double payment, California waived the first year fee that was to be paid in 2021 but you are expected to pay this $800 because this will apply to the 2022 tax year and not for 2021. After this, the $800 franchise fee will be due every year by the tax filing deadline.

Check your return to make sure that only the $800 fee that is due April 15 is the only fee being reported instead of $1600, $800 for 2021 and $800 for 2022.

@firebytes

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