FTB Form 984: Business Expenses Worksheet Explained

FTB Form 984, officially titled Business Expenses, is a worksheet issued by the California Franchise Tax Board that asks taxpayers to itemize and document specific business-related deductions claimed on a state income tax return. Unlike forms you attach voluntarily when filing, Form 984 usually shows up in your mailbox as part of a return review or audit correspondence from the FTB. If you’ve received a notice referencing this form, the agency is asking you to back up the expense figures you reported with a detailed breakdown and, in many cases, supporting receipts or records.

The form is structured as a series of categories where you list amounts spent on things like advertising, travel, meals, supplies, contract labor, insurance, repairs, and other ordinary costs of running a business. Rather than simply restating the total you already put on your Schedule C or business return, Form 984 pushes for a category-by-category accounting so the examiner can compare your entries against what was originally claimed and flag anything that doesn’t match or seems unusually high.

Who Needs to File Form 984

This isn’t a form the average filer fills out proactively. It’s typically requested from:

• Sole proprietors and self-employed individuals whose Schedule C deductions triggered a closer look
• Small business owners going through an FTB audit or correspondence exam
• Partners or S corporation shareholders whose pass-through business expenses are being verified
• Taxpayers who claimed unusually large or inconsistent deductions relative to reported income

If your business also deals with local tax registration requirements, it’s worth reviewing our City/County Business Tax Program Participation Guide, since state and local compliance issues sometimes surface together during a broader review of your business filings.

When Form 984 Is Used

The FTB generally sends this form after processing a return, when the numbers reported don’t line up with industry norms, prior-year filings, or third-party information the agency has on hand. It can also appear during a formal audit, where the examiner wants a documented trail for every deduction category rather than a single lump sum. Because the form asks for specifics, it’s meant to speed up the verification process — instead of the FTB requesting piecemeal documentation over several letters, Form 984 consolidates the request into one worksheet.

If your business is dealing with losses instead of questioned deductions, that’s a different track entirely. Corporations working through net operating losses should instead look at Form 3805Q for NOL computation and disaster loss limitations, which handles carryforwards rather than expense substantiation.

How to Get and Complete the Form

Form 984 (REV 08-2020) is available directly from the FTB website as a PDF. It does not have fillable digital fields, so you’ll need to print it and complete it by hand. Use black or blue ink, write legibly, and fill in every category that applies to your situation — leaving a line blank can raise more questions than it answers. Keep a copy of the completed form along with any receipts, invoices, mileage logs, or bank statements you’re using to support the numbers, since the FTB may request that backup separately or reference it directly in follow-up correspondence.

Once completed, return the form using the method specified in your FTB notice, whether that’s mail, fax, or an online response portal tied to your case number. Missing the response deadline can result in the disputed deductions being disallowed outright, so treat the due date on the accompanying letter as firm.

If your business is also winding down and facing dissolution-related tax matters, our guide on the nonprofit pre-dissolution tax abatement request covers a related but separate process worth understanding if that situation applies to you.

Because Form 984 exists specifically to verify what you’ve already reported, the safest approach is to keep organized business records year-round rather than reconstructing them after an FTB notice arrives. That habit alone resolves most of these requests quickly and without additional back-and-forth.