Not Eligible for NJ State Electronic Filing

[jigsaw1234]

I've been using TurboTax for many years and have had no issues filing my federal and state taxes electronically.  With respect to trying to submit my 2019 tax year returns in 2020 however, TurboTax would only allow me to e-file my federal return (which I was able to do successfully), while indicating that I was not eligible for filing my NJ state return electronically and thus would need to file that return by mail. 

Apparently the reason for e-file ineligibility was as follows, "Returns using inherited on the federal return for acquired date for Schedule B or NJ1040NR, Part I, are not eligible for electronic filing".

The issue in question relates to the sale of a house in Florida in September 2019 that my two brothers and I inherited from our mother who passed away in February 2019, where her limited assets (which included her home) went through the probate administration process. The proceeds from the house that sold were split evenly (1/3 each) and we each received 1099-S forms for the real estate transaction with the apportioned gross proceeds.  I recorded the corresponding information in TurboTax when filling out my federal return.  My understanding is that TurboTax transferred the relevant information for the inherited house (and corresponding sale of the asset) from my federal return to my NJ state return which apparently led to the message indicated above that prevents me from e-filing my NJ return.  Just curious if the inability to e-file for this particular issue applies to NJ only or to some or all other states?

In any event, is there a work around solution that addresses this issue satisfactorily that will allow me to e-file my NJ return and reduce the timeframe for receiving an anticipated refund, otherwise if not, I will mail the return in (along with the corresponding tax statements required) and wait longer to receive the anticipated refund?

Secondly, based on the situation with the inherited house described above, is the reason or rationale for why NJ state returns cannot be e-filed directly is because some inheritance tax implications may apply in NJ for property inherited outside NJ (such as Florida in this case) that the NJ Division of Taxation would like to review in more detail by receiving a mailed copy of the return and corresponding documents?  My understanding from the lawyer that handled the probate administration was that this should not be an issue.  Appreciate any help or guidance on this issue.   Thanks in advance.

[fanfare]

Just remove the "Inherited" designation and use the LT sales category ("F"), enter a date acquired that is more than a year from the sale. Inherited is always treated as LT, no matter the actual acquired date. in Description enter "Inherited 33 percent"

Make a print copy of your federal return as originally filed, first.

[jigsaw1234]

Thanks fanfare for the response. With respect to the guidance provided, if I understand you correctly, it appears that the "Inherited" designation carried over from my federal return (which I've filed electronically already) to my NJ state return can be edited to list the LT sales category instead to allow me to e-file my NJ tax return rather than mailing in the NJ return.  Is that correct?  If so, wouldn't that change raise a potential red flag if my federal return lists "Inherited" and my NJ state return lists something different (i.e., the LT sales category instead)?  Secondly, since the inheritance of our mom's house and subsequent sale of that house occurred in the same year, I would think changing the date acquired to be greater than 1 year from the date of sale to fit the LT sales category would also raise a red flag that I do not want to do, since if I were to change the date acquired to be greater than 1 year from the date of sale, I would be submitting falsified information.  As such, I will keep the "Inherited" designation on my NJ return to be consistent with my federal return and mail my NJ state return in this year.

[ThomasM125]

You have to be careful about not answering questions truthfully in TurboTax. For one thing, taxes are complicated and it is hard to fully understand the potential consequences of entering a false response. Also, if you don't answer all of the questions in TurboTax accurately, you will void the accuracy guarantee the program affords you.

It's a little bit of trouble to mail your return, but the peace of mind you get from knowing it was filed correctly is normally worth the extra effort. 

[fanfare]

"You will void the accuracy guarantee the program affords you."

Ha!   Try collecting on that !

[jigsaw1234]

ThomasM125 - With respect to my particular question / issue that caused TurboTax to indicate that I was not eligible to e-file my NJ return, I totally agree with your statement, “It's a little bit of trouble to mail your return, but the peace of mind you get from knowing it was filed correctly is normally worth the extra effort.” Thanks for taking the time to respond to my posting.