Was medically retired late 2022 after 20+ years of service (combat related).
-Box 7 on 1099-R has code 3 (disability)
-DOD rated me at 100% and VA rated me at 100%. I know VA is not taxable whatsoever, my issue is on the DFAS side and TT not allowing me to pay state taxes with $0 income.
-I paid $685 in state taxes as I was unsure if california would tax my retirement pension from DFAS as I am CRDP and not yet approved for CRSC.
-Box 1 (along with 2 & 4) is $0.00 for gross distribution.
-When I was first retired I spoke with DFAS and they said that my DOD retirement wasnt federally taxed but they couldnt speak on if california would tax it thats why I kept paying it. I now know that I did not need to.
How to work around this error or is that $685 a loss that I willingly gave to CA? If I put $0 in box 14a it will let me proceed but then I cant claim the $685 for state tax return.
Thank you for your time and if more info is needed please let me know.
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Yes, that is correct. You will get an error with an income form that has zero income. Further, you will get an error when withholding exceeds income on an income form. Here are two possible solutions.
1. If you do not have any other income and therefore do not have a requirement to file a tax return, then you simply don't file a tax return and write to the CA Franchise Tax Board making a request for refund. Make an explanation and Include a copy of the 1099-R with zero income and CA withholding. Here is a link with more information on what to include in your refund claim.
2. If you have other income and thus a requirement to file, then do not include the form 1099R with zero income and CA withholding. Instead enter the amount as withholding not on a form 1099 in the Federal interview using the steps below. That will show the credit for those amounts paid on your CA return without entering a zero income form 1099R.
Yes, that is correct. You will get an error with an income form that has zero income. Further, you will get an error when withholding exceeds income on an income form. Here are two possible solutions.
1. If you do not have any other income and therefore do not have a requirement to file a tax return, then you simply don't file a tax return and write to the CA Franchise Tax Board making a request for refund. Make an explanation and Include a copy of the 1099-R with zero income and CA withholding. Here is a link with more information on what to include in your refund claim.
2. If you have other income and thus a requirement to file, then do not include the form 1099R with zero income and CA withholding. Instead enter the amount as withholding not on a form 1099 in the Federal interview using the steps below. That will show the credit for those amounts paid on your CA return without entering a zero income form 1099R.
@DMarkM1 Thank you for the reply. I thought I would have to eat that loss and I E-filed yesterday morning and just put $0 in 14a. I will amend and use the steps that you gave me once it has been accepted and fully filed by the IRS. Thank you again for this information, I searched for info for almost a week but couldnt find my exact situation.
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