My husband withdrew from his 401K- Alabama keeps rejecting our return with the AL 40-050 error on our 1099-R Form. I am guessing that because the payer of the 401K is located in Iowa, Alabama is flagging us as recieving money from working in another state?
We didn't work or recieve money from another State, just the 401k which was through his employer in Alabama is based out of Iowa.
I don't know what to do to remedy this issue.
Go to the 1099-R and follow these steps while remembering the federal already has the form from the issuer and does not care what you type in the state box. While this sounds like a reject issue, it is a matter of how the states tax. Iowa is out of luck.
- Go to Income
- Scroll down to the state section
- Is anything entered there?
- If something is entered, be sure state, state ID, and amount are listed.
- If it is blank, we need to enter something. We are going to lie to make the system happy. Let's enter TX- no state tax, don't care if you said $1,000,000 from there. For the state ID, enter the federal ID and the correct amount of income.
Happy filing and Roll Tide!
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Alabama Code AL40-050 is a rejection on your return because your total Alabama Wages must equal the total amount of all State Wages and distributions (including income earned out of state) as reported in Box 16 of the Federal 1040 W-2 or on your 1099-R form, Box 16.
Since this income was not sourced in Iowa (the address of the payer does not impact anything in this situation), you should input Alabama in Box 15. As an Alabama resident, all of your income is subject to tax in Alabama. This error is mandating that your Alabama wages must total all of your state wages on your W-2's and your 1099's (whether sourced in your resident state or not).
Therefore, please ensure that your 1099-R input states the following:
- BOX 14: $0 (if not tax was withheld)
- BOX 15: Choose Alabama and input the FEIN as shown in the box Payer's TIN (if there is no state identification number on your 1099-R).
- BOX 16: Enter the amount as shown in Box 1.
If this is what is entered, then you need to go back through your W-2's or any other 1099's, if applicable.
Fixing every W-2 or 1099-R that is on your return should fix your error. If not, then we will need a diagnostic copy to assist you further. Comment below if you have further trouble and instruction will be provided on how to send us a diagnostic copy.