Do not enter the California tax withholding in the 1099-S/Sale of Home section. Instead, enter it as a tax payment.
- Go to Federal > Deductions & Credits.
- Scroll down to Estimates and Other Taxes Paid.
- Select Other Income Taxes > Withholding not already entered on a W-2 or 1099.
- Enter the amount under the State section. This ensures you get the Federal deduction (if you itemize) without creating an error on the state side.
Steps to Fix the Error:
- Remove 593 from 1099: If you added the withholding amount to a 1099-S or similar entry, remove it there to avoid double-counting.
- Go to State Section: Navigate to the California tab.
- Find 593 Section: Locate the section for "Real Estate Withholding" or "593" (often under "Adjustments to Income").
- Enter 593: Enter the withheld amount from your actual Form 593. This tells California exactly how much was withheld.
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