Error: State tax withheld in Box 17 cannot be greater than or equal state wages in Box 16.

[lilrhody808]

Hello! I realized when I received my W-2 that my employer still had my previous state (Arkansas) listed as my residence and so for 2022, all my state income tax went to AR. They sent me an updated W-2C in January to rectify all of my income to Rhode Island and remove all income from Arkansas. Now when filing, am I supposed to list the state income tax that was withheld / paid in 2022 in my W-2 for Arkansas? Or do I list as $0? I'm unclear how to ensure I get a refund from Arkansas.

If I list as $0, then it obviously projects $0 refund from Arkansas. And then I can't physically list the tax I did pay if I list my Arkansas income as $0 in my W-2. Thanks!

[AliciaP1]

You need to blend the information from your W2 and your W2c.  If your employer did not refund you the AR taxes withheld, you will still leave that line on your W2 entry.  You will then need to file a non-resident AR tax return to claim the refund.

[lilrhody808]

Thanks Alicia! If they did not refund me, then will I need to list my income as taking place in Arkansas on my Federal return? It won't let me have $0 income in Arkansas and also say that tax was withheld. I'm trying to figure out to correctly blend in the information between my w-2 and w-2c.

[AliciaP1]

Yes, enter the state line as it shows on your original W2.  They actually should not have sent a W2c if they weren't going to refund you the state taxes withheld directly.  The W2 they issue is supposed to accurately reflect what actually happened in 2022, not what was supposed to happen.

@lilrhody808