For Those Who Can't Make the April 15 Tax Deadline

For those who can’t quite make the April 15 tax deadline this year, the State of California offers an automatic filing extension through October 15, 2014.

Nearly 1.6 million taxpayers had an extension for the 2012 tax year. For those who are unable to make a timely tax return, FTB advises: If the taxpayer is due a refund, he or she must file their return by October 15, 2014. If the taxpayer has a balance due and wants to avoid penalties and interest, he or she must pay the amount owed by April 15, 2014, then file the return by October 15, 2014. (For more details on filing an extension, see FTB's website: https://www.ftb.ca.gov/individuals/faq/ivr/201.shtml).

Withholding Fuels Income Tax Revenues

While many Californians may be waiting until this weekend to complete their tax returns, companies have provided a steadier flow of revenues for the State through their withholdings. For the first 10 days of April, withholding taxes totaled about $1.7 billion. This compared with $1.1 billion in estimated and final tax payments and represented about 60% of the total gross personal income tax receipts deposited so far this month.

Tax filings will ramp up dramatically next week, but withholding taxes will continue to flow into the State’s coffers, providing a good source of support.

Californians Benefit From Refunds

Californians have been submitting their tax returns in recent days with many of the early returners looking forward to refunds. During the first 10 days of April, refunds on personal income taxes (PIT) totaled $1.1 billion. That compares with about $840 million a year ago.

When the State returns money to taxpayers, it is not a complete or permanent revenue loss. This is because refund recipients will turn around and often spend a significant share of their receipts on their homes or purchases for themselves and their families. This spending will both help drive California’s economy and come back fairly quickly in terms of higher retail sales taxes.

So far this month, for every three dollars of personal income tax payments the State has received, it has sent back more than one dollar in refunds. This is similar to the share sent back during the comparable period in 2013. For all of April, the share of refunds to gross PIT will be about half what it has been as fewer of the later filers receive money back. Last year, refunds were equal to 16.5% of gross PIT for the total month.  A similar experience is likely this year.