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California Form 541 for Trust, problem handling Form 593 Real Estate Withholding

I am using TT Business 2023 to file a Form 1041 and the corresponding California Form 541 for a trust.   The trust has real estate sales.  California may withhold tax on some real estate sales; the withholding is reported on California Form 593.  The withheld amount is a tax payment, and TT Business does have hooks to handle it correctly, but they don't appear to working, at least not in WinBizRelease version 023x000x0241 [the x's are to avoid the version number being mistaken for a phone number and deleted].  Instead TT Business may treat your withheld tax as a deduction (Form 541 line 11), not a tax payment (Form 541 line 31).

 

In the California interview section "Other Tax Withholdings", on the first page "Tax Withholding for 2023", answer "yes" to the question "Do you have any California income tax withheld for 2023?"  The next page offers you two boxes. One for income tax withholding and the other for "Real Estate or Resident/Nonresident" withholding.  Enter the 593 withheld amount here.  This amount flows to the Tax Payments Worksheet, Part II, line 2.

 

The Tax Payments Worksheet has a checkbox to "Transfer withholding from Forms 592-B or 593" that does not seem to appear in the interview.  But checking the box manually on the form will result in an error, "CY 592-B Wks/593 Ck Box should not be checked unless there is a completed corresponding Resident and Nonresident Withholding Tax State or Real Estate Withholding Statement".  I tried to add a copy of Form 593 but it does not appear in the list of available forms, only various versions of the Form 592 Resident or Nonresident Withholding.

 

I can force Form 541 to be correct be editing it: (1) subtract the 593 payment from line 11.  This will make it zero if you have no other tax payment deductions.  Then (2) add it manually to line 31.  Now TT will correctly calculate your tax and refund. However it will also leave you with a TT error for line 31 because there is no Form 593, and this makes the return ineligible for electronic filing.

 

I'll try contacting support tomorrow.

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2 Replies

California Form 541 for Trust, problem handling Form 593 Real Estate Withholding

To follow up on the problem, this morning I spent a total of 2 hours on the phone with two separate TT support folks. Both were reasonably knowledgeable and tried very hard to help me with this problem; both escalated to their backline support.  But in the end there was no solution except to ignore the errors and file on paper. 

 

Fundamentally the problem is that no way could be found in Turbotax Business (WinBizRelease 023x000x0242) to satisfy the requirement, enforced by the Tax Payments Worksheet, to complete the California Form 593 Real Estate Withholding Statement. The same problem would occur for a Form 592 Resident and Nonresident Withholding Tax Statement -- there is no way to complete one of those either.  Because of this, ticking the checkbox on Part II line 2 creates an error, both on the worksheet and on line 31 of Form 541.  The amounts, however, are all calculated correctly with that change.

 

LenaH
Employee Tax Expert

California Form 541 for Trust, problem handling Form 593 Real Estate Withholding

If you are still getting an error, it would be helpful to have a TurboTax ".tax2023" file that is experiencing this issue.

 

You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions:

  1. On your menu bar at the very top, click "Online"
  2. Select "Send Tax File to Agent"
  3. Click "Send"
  4. The pop-up will have a token number
  5. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information. 

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

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