Grateful to all the comments here and various solutions folks offered. Was able to adjust TT data for my return for California to accept my return. I went with the solution of "itemizing" my charitable donations. Going to write in details why that option to pay back to the community for all the help it offered. Disclaimer: I'm no tax expert, have vivid imagination and not affiliated with Intuit, so definitely not a tax advice.
My case:
- Married filing jointly
- Federal standard deduction (so maximum $600 can be claimed in charitable contributions on line 12b)
- Donated in 2021 more than $600
Assumptions:
- In federal 1040 line 12b is "how much you claim in charitable contributions" and it's capped with $600 for married filling jointly w/ standard deduction
- In California 540 Part II the line 11 "Gifts by cash or check" is about how much you actually gifted (so it can be more than 1040's line 12b, as it's not capped)
- When California sees 540's line 11 to be empty (i.e. "no charitable contributions"), yet on 1040 line 12b isn't zero (i.e. "there were charitable contributions"), it sees it as a discrepancy and rejects the return.
- At some point during the TT process it asked "How much have you donated in 2021?", but then it just derived line 1040's 12b from it and hasn't stored this info to populate CA 540's line 11).
Now it's important to distinguish
- TT's federal return data - all the answers & info you provide to TT
- actual federal return - 1040 & friends that TT derives from that TT's federal return data
IRS doesn't know and doesn't care about TT's data, only about actual return. Yet for TT it's the the source of truth from which both federal and parts of state return are derived. There were people concerned about changing TT's federal return data, because it might change actual federal return that was already accepted by IRS. Valid concern as it's no good to have one version of federal return submitted to IRS and another version of federal return attached to your state return. Likely this mismatch will be discovered by IRS & state later in the year when they presumably synchronize their records, and the corresponding tax payers might get asked about it.
Therefore there is one path to fix the problem:
- Supply TT with data about charitable donations so it can populate CA 540's line 11
- It seems like CA 540's line 11 is derived by TT from its federal return data, therefore that one has to be updated
- Ensure that even if we change TT's federal return data, the actual federal return isn't affected by it.
So I ended up doing these steps:
- Going in TT Online to my Federal Return
- Clicking "Revisit" for charitable contributions
- Ignoring TT's message that "you're taking a standard deduction, so no reason to enter anything here" and saying "I want to enter anyway"
- Entering my 2021 charitable contributions (for each charity donated entering its name & the amount)
- Going through the state return by revisiting but not changing anything, just getting to the end.
- E-filing again, and receiving acceptance from California in 3-4 hours.
Those steps resulted in actual federal return being identical to my first submission that went to IRS, i.e. line 12b remained $600. Yet CA 540's line 11 column A was populated with the total amount of my charitable contributions. Later in the same Schedule 540 other lines changed, most importantly line 29 (it was 0 before and now got a number). Yet line 30 stayed the same, as standard deduction was still bigger. Hence nothing changed for the final numbers on both federal and state returns, they remained the same as they were when I did the submission for the very first time.
Hope it helps at least for some people with a similar situation.
