I have encountered a similar issue. I tried entering the amount from box 1 in Box 16 as suggested, even though the W-2 has no amount for state wages (box 16). This alleviates the error on the Federal side but there is an error on the PA state return. When answering the questions on the state return for this W-2, I checked the box that this is not taxable for PA, as was suggested. When I run the state check, I receive the following error: “Gross Compensation Worksheet: Include W-2 as taxable. Full year PA resident must include all income. Line item for W-2 number should be marked as taxable to PA.” It seems to be trying to force it to be taxable for state purposes. This suggested solution does not seem to work for me. My W-2 has state code PA in box 15 and an employer’s state ID number but no amounts in state wages or taxes. I also tried entering nothing in box 15 and 16, but the program then prompts for the state and amount on the following screen.
I’m retired. This income is from an Excess Pension Plan. It “is not” money that I put into a typical deferred compensation plan and am now withdrawing. I contacted my employer and they confirmed it is properly reported and it is not taxable for Pennsylvania purposes. Please advise.
Also last year I had the same issue. I overrode the federal error in review and filed electronically. For the state I just let the error unresolved and filed a paper return. I excluded the compensation worksheet and sent in W-2s and 1099-Rs with the state return. Obviously this is not an optimal thing to do each year.
