California Differences - Dependents
California conforms to Federal law for the determination of dependency. California allows a nonrefundable credit for the taxpayer, spouse and each dependent.
Dependents Ineligible for SSN or ITIN - For taxable years beginning on or after January 1, 2018, taxpayers claiming a dependent exemption credit for a dependent who is ineligible for either a Social Security Number (SSN) or a federal Individual Taxpayer Identification Number (ITIN) – generally, these would be nonresident aliens, including dependents who are residents of Canada or Mexico – may provide alternative information to the FTB to identify the dependent for whom the dependent exemption credit is being claimed. For each claimed dependent without an SSN or ITIN, this is done by completing form FTB 3568, Alternative Identifying Information for the Dependent Exemption Credit, attaching the form and required documentation to the taxpayer’s tax return, and writing “no id” in the SSN field of line 10, Dependents, on Form 540 or 540NR (line 8 on Form 540 2EZ).
Documentation needs to be provided to the FTB to establish the dependent’s identity and residency in Mexico or Canada (“foreign status”). See the instructions to form FTB 3568, available at 2021 Instructions for Form FTB 3568 Alternative Identifying Information for the Dependent Exemption Credit (ca.gov) for details on acceptable documentation.
AB 2247, signed 9/18/20, that enacted the alternative ID information for dependents provision was retroactive to 2018, which may provide amendment opportunities for 2018 and 2019 California returns in situations where a dependent credit wasn’t claimed because the dependent lacked the federally required ID number. See “What’s New” in the 2020 FTB 3568 instructions - 2020 Instructions for Form FTB 3568 - Alternative Identifying Information for the Dependent Exemption Credit (ca.gov) - for directions on filing amended returns for those years.