AL40-050 error code

[cctayloriii]

Yesterday, I e-filed my Federal and State of AL tax returns. The Federal return was accepted but the State of Alabama was rejected with Code AL40-050. From reading similar correspondence from others in 2021 (for tax year 2020), I wanted to get specific instructions for this tax year (2021) because the instructions listed for the 2020 tax year is not accurate for the 2021 tax year. 

I am filing "Married filing jointly" with residency status in "Alabama". My wife is an RN and for the first half of 2021 she worked out of the state of Alabama on two occasions. She worked in the state of Maine and the company she worked for withheld state of Alabama income taxes. I downloaded the state of Maine income tax from Turbotax but chose not to e-file the Maine return since we owe a small amount to the State of Maine and will file by mail.

She also worked in the state of Washington and the company she worked for DID NOT withhold Alabama income taxes (or any state taxes). Since Washington state does not have a required state income tax, there was no filing required for the state of Washington. The W2 from that company does not have any information listed on their W-2 for Box 15, Box 16 and Box 17.

I have verified that the information from all the W-2's match what I entered into TurboTax. I feel like the error has to do with this W-2 for work while she was in the state of Washington but I first wanted confirmation that this is in fact the source of the error and secondly, a step by step instruction for 2021 tax forms on how to properly correct the error to satisfy my tax filing obligations.

Please help. This is my second post for help with no response from the first post. I have used TurboTax for 15+ years and for the first time I am in need of assistance.

Thank you.
Chuck T

[AnnetteB6]

Seeing a similar question that was posted last tax season, the following possible solution was offered.

Since one of the W-2s was issued from a state that does not have any state income tax and there was no state information included on that W-2, it is the one causing the mismatch with the Alabama return.  Try entering the box 1 amount on that W-2 in box 16.  

[cctayloriii]

Thank you for responding AnnettB6. I sincerely appreciate your help.

This information was what I thought I needed to do but I wanted to make sure before proceeding. Since I am changing the entry from this W-2, will I need to amend my federal return?

[AnnetteB6]

No, the Federal return takes its W-2 information from box 1, which is not changing.  No amended return is needed.  

To make sure that the Alabama return picks up on the change, you might try going through it again from the beginning.  

@cctayloriii

[cctayloriii]

You have been a huge help and put me more at ease with filing my returns. I have one more question and I hope to be done with everything.

My wife worked for this same company in 2020 and on the 2020 W-2 the AL taxes was withheld.. When I am filling out the 2021 W-2 section for Box 15, Box 16 and Box 17; I put the income from Box 1 in Box 16 and then enter 0 for Box 17 (since no AL state taxes was withheld). For Box 16, do I need to enter the Employer's State ID from the previous W-2 (when AL taxes was withheld) or do I need to leave that blank?

Thank you

[AnnetteB6]

Since the W-2 is actually representing income from Washington state, fill out boxes 15 through 17 as Washington wages.  Enter WA for the state and enter the Federal ID number for the state ID or leave it blank.  

You would not want to enter the Alabama state information from the 2020 W-2 because the wages did not come from Alabama.

@cctayloriii