Bug in CA Form 568: Schedule IW Line 3 for Annual Limited Liability Company Tax (values and calculations are wrong)

[pekkis44]

We're filing taxes for a business that closed the shop in November 2025. During the Federal Income section of TurboTax Online, we answered that the company was closed in 2025.

Now, in the CA state section, when TurboTax provides a pre-populated Form 568 to fill, it has correctly checked the box 'final ever return for this LLC'. However, it now incorrectly enter value $0 for Line 3: 2025 Annual Limited Liability Company Tax. The FTB rules pretty clear indicate that the 2025 tax liability is $800 (with some exclusion that do not apply).

When I try to manually edit the relevant values from $0 to $800, the form lets me move forward, but the edits are never saved. The tax return preview shows incorrect values as well.

This leads to miscalculation of FTB owing the LLC $800 (refund due) - which is incorrect and could get flagged by the state.

Is there a workaround, or am I thinking about this wrong? Are there any TurboTax employees on this forum who could look into this?

Thank you.

[PatriciaV]

If you uncheck the "Final Return" box on Line H of Form 568, the LLC tax will appear on Line 3. 

You can check the box on Line F of the CA Sch C Wks to indicate you disposed of the business; this does not cause the "Final Return" box to be marked on the 568.

[pekkis44]

Thank you for the response. I should have clarified that I am using the Online Version of TurboTax.

---

@PatriciaV wrote:

If you uncheck the "Final Return" box on Line H of Form 568, the LLC tax will appear on Line 3. 

You can check the box on Line F of the CA Sch C Wks to indicate you disposed of the business; this does not cause the "Final Return" box to be marked on the 568.

---

I do not have the ability uncheck the "Final Return" box. It is a radio button and I can only select Initial Return, Final Return, or Amended Return option.

How can I achieve this in the online version?

Thank you,

jp

[PatriciaV]

Yes, you should be able to remove all checkmarks from Form 568 Line H. If not, are you able to change the zero on Line 3 to $800? You may also need to manually enter that amount on Lines 7, 16, and 21.

[pekkis44]

Unfortunately, neither of those options work. 

1) Line H: Can not uncheck. TurboTax Online is forcing me to choose one of the predefined mutually exclusive options, unless there is a trick to unselect?

2) Manually overriding Line 3+: Updating the values by hand is not having any effect. I tried entering the values below, which I believe are correct based on last year's return, but TurboTax is ignoring these values when moving forward. The print preview of form 568 shows the original, incorrect form values, not the ones I entered.

Manually entered values are not saved

[PatriciaV]

Your other option is to delete the California State return and start over. This time, don't check the box for "Final" return.

1. Open or continue your return.
2. Select State Taxes from Tax Home.
3. On the Status of your state returns screen, select the trashcan icon next to your state, then select Delete.

If you’ve already paid your state fees, you can’t delete your return, but you can start over by selecting Start Over next to your state return on the Status of your state returns screen.

[jbinsantamonica]

The suggested solution, to uncheck final return, is not acceptable.  If the business closed in 2025, then 2025 is the final return. The program should know that the $800 is still owed for 2025. In my situation, I'm using the desktop home and business. The LLC in question was dissolved in December of 2025. Filing a tax return for 2026 when a business didn't even exist on January 1st of that year, makes no sense. Will the experts here agree that it's a bug in the program that it doesn't know the $800 for the final year return is still owed?  

UPDATE: The desktop version allows me to override and type in 800. Since I have two LLC's I have to mail it in anyway, so I guess that's my solution.

[PatriciaV]

We may be able to report this experience to our development team now, but it is unlikely an update will be released before the filing deadline.

In order to research this further, it would be helpful to have a TurboTax ".tax2025" file. If you would be willing to send us a “diagnostic” file that has your “numbers” but not your personal information, please follow these instructions: 

In TurboTax Desktop, open your return and go to Online in the TurboTax header. (On a Mac computer, choose Share or Help.)

1. Choose Send Tax File to Agent.
2. You will see a message explaining what the diagnostic copy is.  Click Send on this screen and wait for the Token number to appear.
3. Reply to this thread with a screenshot of your Token number (this avoids Community filters for numbers with a dash) and tag (@) the Expert requesting the token from you.
4. Please include any additional States that are part of your return - this is VERY important.

[user17760192809]

I am facing the exact same issue. I would need to file a paper form so I was trying to delete the form 568 in Turbotax, it says "Form 568, p 1-2: LLC Return of Income was successfully deleted." but it still shows up. So here is another bug.