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I am getting this error IND517-02 when I try efile my returns.  I confirmed my son did not select the (You as a dependant ) on his return .  Which his was approved and received refund .  He was using the free online turbotax version .  Can he ammends his or should i just mail in the returns  .  What is best way to handle this ?

It IS possible to owe no taxes when you file your return, but still have to pay a penalty.    As long as your tax liability for each quarter is covered, then you would not have a penalty at the end of the year.  It is about the pay as you go, not the end result.    This means, if you earn $100,000 total for the year and wait to pay all your taxes until December 1, you WOULD have a penalty.     If you have taxes withheld by your employer equally that matches what you earned each quarter or you made estimated payments, then you would NOT have a penalty.   The vouchers aren't the important thing.  The thing that is important is that your taxes are paid or withheld throughout the year not just at the end of the year.  

Actually, either option 2 or 3 will work.  And they are about the same amount of work so there really isn't one I can recommend because it's easier.     I think I would create a new asset for the portion that was previously personal just in case I wanted to move back in so I wouldn't have to undo this again.  But you seem to have a pretty good handle on this so do the one that works for you.   @jummus 

But if box 4 (federal tax withheld) is also empty, and I don’t report the income by putting zero in box 7, aren’t I at risk of being penalized for not reporting income that was already shared with the IRS?

As a cash basis taxpayer with a business that isn't required to report inventory, you can "sell" all your remaining inventory in one tax year. From that point on, you would have no inventory to track or report. Simply expense your purchases as merchandise or supplies.   This would not be a change in accounting method requiring Form 3115, since you are not changing how you value your inventory. You basically have no more inventory.   @ritanbobk 

You would enter the interest for your second home in the mortgage interest section as if you received a Form 1098.     See the following TurboTax help article to learn more:   Is mortgage interest on an RV or mobile home tax deductible?   @macfam 

Thank you for the response. I live in CA. I tried entering my W2 home office expense and noticed it changed my state refund, and the federal due amount remained the same. Does that sound about right? 

If you decide to remove your son as a dependent then you will not have the issue of duplicate use of his SSN, so you can e-file --- if that is what you want to do.  If you do not claim him, you lose the $500 credit for other dependents, and possibly Head of Household filing status if you are a single parent, and earned income credit.

The question does make sense, but the circumstance does not.   This may be an issue with the classification of the states. Back in My Info for your daughter did you enter her home state for the whole year, or only for a part year. It should be the whole year.  Time at school is temporary. Did you then say that State 2 was a part year resident.  That is wrong. She should show as a non resident.  

Brittany My product is simply Business but, it covers what I need and, specifically says for trusts.  Now, I am doing a Trust and my top banner does not have a Personal tab. Reads: General info - Federal Taxes - Federal Review - State taxes - File Under Federal Taxes - Income - Deductions - Distributions - Other   under Other there is estimated taxes but only a table to enter amounts and dates There is nothing about penalty Thanks  Tp