Californians who sold their home in a short sale in 2013 are at risk of overpaying their state income taxes, warned Board of Equalization Member George Runner. The Franchise Tax Board announced recently that Californians who had mortgage debt forgiven in a short sale are not required to pay income tax on that debt.
Runner has learned some tax preparation software may not be up-to-date, potentially forcing affected Californians to pay taxes they don’t owe. Adding to the confusion, some tax preparers may not be aware of this problem.
“Before you file, look carefully because you may be overpaying thousands of dollars in state tax,” said George Runner. “Taxpayers should never have to pay more than they owe.”
Runner encourages taxpayers who have questions to contact his office at 1-916-445-2181. For more information on mortgage forgiveness debt relief and short sales, go to FTB’s webpage or call FTB at 1-800-852-5711.
If taxpayers are unsure that their tax preparation software is calculating their short sale correctly, they should contact the tax preparation software company’s customer service department for assistance.
Elected in November 2010, George Runner represents the State Board of Equalization’s Second District, which includes the Santa Clarita Valley. For more information, visit www.boe.ca.gov/Runner.