So why are refunds so much lower this year than in the past? Look no further than one of the budget deals reached last year by Governor Schwarzenegger and state lawmakers. Here’s Franchise Tax Board spokeswoman Denise Azimi:
Azimi: “The personal income tax rates were adjusted by a quarter of a percentage point – and that’s for 2009 and 2010. And then also, the dependent exemption credit was also scaled back this year for two years.”
… from a little over $300 to $98.
If you can’t pay all – or any – of your taxes on time, Azimi says make sure you still file your returns on time, pay what you can, and then set up a payment plan for the rest. That way, you’ll avoid penalties and interest.
And in case you were wondering if the state can afford your refund when it’s in such a big budget crisis, Azimi says they’ve all gone out as scheduled this year.