KY Taxes Incorrectly withheld on W2 and using 0 for wages and salaries causes State eFile to be rejected

[BryanMo]

I had KY taxes mistakenly withheld from my paycheck, I live in TX and I shouldn't have had any State taxes withheld. The employer won't fix or refund. I mailed a return last year (same issue) and got the refund by putting a 0 in the Wages and Salaries box for Kentucky. This year Turbo tax allows it but the eFile rejects it with "F740NP-0004 - Form W2 filed with Kentucky wages, but not reported on Form 740-NP, Section B, line 1, column B. " which is true... is there another flag I have to flip? Putting in 0 in TurboTax is what causes the disparity but that is what it looks like people are told to do if there is mistaken state withholding and you are requesting a full refund. If I have to file manually, do I get the $ back I had to pay to eFile?

[HelenC12]

On the federal side of TurboTax, if you're putting in a zero in your W-2, box 16, that's incorrect. You need to enter your W-2 exactly as you see it. The zero adjustment is entered on the state of KY side of TurboTax. When you allocate the income on the KY nonresident income tax return, you would enter a zero in the box.

• Please review: How do I file a nonresident state return?

You should be able to E-file your federal return and your nonresident KY return.

[BryanMo]

Hi thanks for the response.

I didn't touch the W2 box 16 side of things on the federal or state it has the $ amount I am trying to get back. The error seems to come from the fact that I put 0 in the KY side though the turbotax software (not the form itself).  This puts a 0 in Section B, Question 1  Column B (which used to have the $ that was mistakenly shown as taxable in KY on my W2). 3rd bullet point in your response in the "Also" section has :

• If preparing a nonresident return solely to recover erroneous tax withholdings, enter 0 on the screen that asks for the amount of income earned in that state. This will eliminate your tax liability for that state, resulting in a full refund.

Doing this is what appears to cause the reject reason (F740NP-0004 - Form W2 filed with Kentucky wages, but not reported on Form 740-NP, Section B, line 1, column B.) because now I say I have 0 taxable from KY in that column and the eFile KY rejection is telling me I have a Form KW-2 column E that has an amount (which is a summary of the W2 KY state taxable income and taxes withheld).  Do I need to maybe override this Kentucky Form KW-2 and enter 0 in column E (titled KY State Wages (Box 16 of Form W-2)) to make the taxable match the Form 740-NP Kentucky Adjusted Gross Income amount (both being 0)? 

Thanks,

Bryan

[AmyC]

That seems like a reasonable solution. However, when you override anything in the program, it voids the accuracy guarantee. If you want to get support on the phone (and let them in to your program) to look for another solution, then if nothing is found and they tell you to override, you will be covered. Keep your records. Contact Us if you want to have someone else take a look.