Error message saying taxes cannot be ore than 20% of wages

[Shanayae]

I keep getting an error message stating that my illinois withholding is greater than 20% of the illinois wages. I work in Missouri but live in Illinois. My job paid taxes to both states. On my W-2 there is nothing entered for state wages for Illinois but there is tax amount listed. The software however, will not let me proceed even though I have entered the information as it appears on the W-2. How do I fix this?

[AmyC]

You need to change the W2 state information section to include the missing IL wages. It is odd to be showing IL tax withheld and not wages.

The state section of the W2 has two purposes.

1. The issuer is letting the IRS know which states to report federal information from your return. That has already been reported to the IRS.
2. It is for the program to use to get your state section correct. You need to correct the IL income.

You are right about never changing anything on the federal portion of the W2. That would be awful!!

[Shanayae]

When I put the IL wages as the amount shown for the Missouri wages, it said I could not efile because when all of the wages are added together, they are more than the total reported federal. Should I add the missouri wage amount to IL and mail in the return?

[BillM223]

Is the amount listed for state wages for Missouri equal to 100% of the federal wages? If not, try subtracting the Missouri wages from the federal wages and entering this as the Illinois wages.

If the Missouri wages as entered are equal to the federal wages so you can't do that, then try this:

• Write down your Missouri tax due/refund and your Illinois tax due/refund.
• Go back into TurboTax and change that W-2 so that the wages reported in each state is one half of the federal amount.
• Go through the state interviews again
• If that doesn't change your tax due/refund in the two states, then go ahead and e-file.

The reason is that most states don't actually use that state wages amount; instead, they start with the Federal Adjusted Gross Income (AGI) and add and subtract things,and the state wages amount on the W-2 is never referenced.

Let us know what happens.

[Shanayae]

So I changed the states to be half of the federal amount and the refund amounts changed. IL-refund was 450 and now is 372. Missouri refund was 349 and now is 427. I am not sure what to do now. Is it safe to proceed?

[BillM223]

It is not clear to me why your tax assessed should have changed in either state.

The two state forms are based on your AGI, not what is in box 16 on your W-2. I am thinking that something else changed in the process of entering that. My test's state taxes stayed exactly the same when I went from blank for Illinois state Wages to $50,000.

Also my Missouri tax stayed the same when I cut the MO state wages in half.

Without seeing your return, it would be impossible for me to tell you why what changed changed. There are other things that can affect your state tax due. For example, if you did something to make MO state tax change, then the Illinois state tax will change because the size of the Missouri tax credit taken in Illinois will change.

I would say, the answer on filing depends on whether or not e-filing your return is important. If you can print and mail, then put the W-2 back the way it was. If you want to e-file, then leave it as is, understanding that there may be something else that I can't see that makes a difference.

The third alternative is to contact TurboTax if you have paid for a product - please see this TurboTax FAQ and let the agent see your return.

[Heidi54]

I note that on 3/8/2025 I received the same TurboTax error message involving a single W-2 for the state of Illinois (no income from any other state) when the total withholding exceeded 20% of gross wages.  It is unclear whether this is an actual rule for the state of Illinois or a bug in the TurboTax desktop software.  If Illinois cannot accept such a return via e-file, that means tedious paper filing.  Moreover, if TurboTax cannot process e-filing for an Illinois return after payment of the filing fee, the user is then required to go through a TurboTax refund request procedure.

[MonikaK1]

If you are getting a message that you can't e-file because your W-2 state withholding is too large for your state wages:

In order to be able to e-file, you can opt to input the wages and other information in the W-2 section, but instead of reporting the state withholding under the W-2, report it in the Federal section, under Deductions & Credits, Estimates and Other Taxes Paid, Other Income taxes.

When you open Other Income Taxes, find the line to report "Withholding not already entered on a W-2 or 1099". Enter the state amount from the W-2 in State withholding in the place provided in the follow-up screen.

@Heidi54 

[Heidi54]

No. It does not work that way.  Actually, the suggested override by direct input via the "Other Taxes" screen was done.  Once entered in the Other Taxes line for W-2, the program generates the message shown in full below.  Clearly, there is a glitch in the TT program.  It doesn't allow use of the Other Taxes per this TT error message.  Moreover, I also tried to break the total into two portions....one reported in W-2 form and the remainder in Other Taxes form; this does not work.  TT simply does not allow use of the Other Taxes form for reporting withheld income.

After requesting a refund through the TT system, and not seeing one come through my credit card, I spent 45 minutes on the phone with a TT rep to get a state tax filing refund.  She could see the situation but the system would not allow her to initiate a refund.  It would only allow her to initiate a receipt.  She suggested waiting another 24 hours and then calling TT again.  I waited.  Nothing.  I will call one more time.  After that, I will submit screen shots to my credit card company and they will reject the charge by TT.

"We Won't Be Able to E-file Your Return"

Reason for e-file ineligibility:

When efiling, there can only be state withholding on W-2, W-2G, 1099-R, 1099-G, 1099-MISC, 1099-INT, 1099-DIV and 1099-OID.  Please review your Tax Payments Worksheet.

Turbo Tax does not support this information to be filed electronically.

The good news is you can still print your Illinois return and file it by mail.