Now that I have taken the time to look at the error in detail. The issue doesn’t seem to be line of the Rental Real Estate. That field is also for loss income which I have from expenses. If this value is not zero then you have to meet the next criteria.
If Form 8960, 'NetRentalIncomeOrLossAmt' has a non-zero value, then it must be equal to Schedule 1 (Form 1040),
'RentalRealEstateIncomeLossAmt' unless all of the following conditions are true:
1) Filing status of the return is Married filing jointly or Qualifying widow(er) and
2) Form 8960, checkboxes 'Section6013gInd' and 'Section6013hlnd' are not checked and
3) Form 8960, 'Filing ThresholdAmt' equals 125000.
1 and 2 are true. 3 is not true because I’m filing married jointly which means my threshold should be $250,000 not $125,000. The error message is basically stating that the validation being done is against $125,000. I should be validated against $250,000 threshold based on the line 14 Instructions. So the 8960 is filled out correctly.
Next, this is happening after it is submitted to the IRS. This means this validation is being done on the IRS side, not the TT side.
