FTB’s Massive Filing Status Audit

The California Franchise Tax Board announced today that they mailed out 135,000 audit letters to taxpayers suspected of erroneously claiming Head of Household status on their 2010 tax returns. A similar audit campaign last year resulted in additional assessments exceeding $35 million. People use Head of Household status because of the tax savings, but few really understand how it works. To qualify, the taxpayer must provide care for more than one-half of the year and pay more than one-half the cost of maintaining their home. The qualifying person must be related to the taxpayer and meet the requirements to be a qualifying child or relative.