Federal and State reviews Ok. Federal rejected

[user17719768122]

Submitted 2 different 1041/541 trusts returns with very similar income, deductions, taxes paid. California accepted. Federals rejected.

E-file status states that rejection is due to a software problem with TurboTax Business. Appear to be associated with form 1116 with relatively small (less than 10% of total income) foreign qualified dividends. Problem to be fixed in future release.

Will I be informed when fix will be available so that I can e-file federals? Latest release does not provide the fix

[DaveF1006 · Accepted solution]

Recent reports from the TurboTax developer team indicate that a significant patch for Form 1116 errors was scheduled for late February and another is slated for mid-March 2026.

The IRS updated the e-file requirements for 2025 to require values (even zeros) on lines that TurboTax previously left blank if they weren't applicable.

The Current Workaround: Some users have found success by switching to Forms Mode, opening the Form 1116 Worksheet, and ensuring that Part IV has a value (type "0" if it's blank and the software allows it). However, if the field is "calculated" and locked, you must wait for the update.

Since California (Form 541) was accepted, your data is clearly correct. The rejection is purely an XML formatting error between TurboTax and the IRS servers.

You won't be informed when the error has been corrected but check back after the third week in March to see if this has been corrected. Meanwhile, check Form 1116 worksheet to see if you can enter the value that I suggest above.