My AL state return is rejected with code AL40-050

[JohnHornbuckle]

As many others have experienced, my Alabama state return was rejected with code AL40-050.

Something is wrong with the way TurboTax is filling out the AL returns when users have W-2's from other states. It's calculating something incorrectly, which is causing AL to reject the return.

There's nothing users can "fix" to correct this, though, because TurboTax automatically calculates everything based on the federal return.

I've seen multiple people report this problem, but haven't seen a solution.

[LenaH]

Alabama Code AL40-050 is a rejection on your return because your total Alabama Wages must equal the total amount of all State Wages (including Wages Earned Out of State) as reported in Box 16 of the Federal 1040 W-2. 

The first thing you want to do is make sure you've filled out the Personal Info section correctly:

1. With your return open, select My Info in the left-hand menu.
2. Then, on the Personal info summary screen, scroll down to Other State Income, and select Edit.
3. At the Did you make money in any other states? question, answer Yes and make sure your nonresident state is selected from the drop-down.
4. Select Continue to return to your Personal info summary.

Now, what does your W-2 state? Is there anything in Boxes 15-17?

If not, then choose Florida in the dropdown box (Box 15) and enter their federal payer ID (as shown in Box b). Then, add your wages in Box 16. This will fix your error and you will be able to refile your return. 

[JohnHornbuckle]

The "My Info" section correctly notes that in addition to making money in AL, I made money in FL.

As for my W-2's... My AL W-2 has numbers in boxes 15-17, which makes sense since AL has a state income tax. My FL W-2 doesn't have numbers in boxes 15-17, which makes sense because FL does NOT have a state income tax.

But my FL income is, I believe, taxable in AL, and I can't help but think that TurboTax is handling this in a way that Alabama doesn't like. I'm plugging in numbers exactly as they appear on my W-2's, and TurboTax is calculating everything from there. The way it's calculating it doesn't align with Alabama's tax code, I suspect.

[LenaH]

Yes, that is correct. Florida does not have state income tax. However, that error code happens when Alabama state wages do not equal the total amount of wages in Box 16. All W-2's entered must have entries in Box 16. For your Alabama W-2, you would enter what is on the form. For the Florida W-2, you would enter the earnings in Box 1. 

In other words, Box 1 of both W-2's must match your states wages in Box 16. 

@JohnHornbuckle

[JohnHornbuckle]

Ahh, okay... So even though my Florida W-2 has nothing in Box 16, I would put the earnings from Box 1 there?

That's not intuitive--it would probably make sense for TurboTax to prompt users to do that, or maybe plug in the numbers automatically when it does the AL return.

How do I go back and change it? Note that I've already filed my federal return, which I think is where the state return gets its numbers from.

[LenaH · Accepted solution]

Yes, you would enter your earnings in Box 16.

If your federal e-file is still pending, you won't be able to make changes until the IRS either accepts or rejects your return. Once your federal return is accepted, please follow the directions on the page How do I amend my 2020 return?

After you initiate your amendment, please go back to the W-2 screens and adjust Box 15 and 16 of your W-2. 

@JohnHornbuckle

[JohnHornbuckle]

Thank you. 

[dpmgoldengloves]

So what about a situation where you are a resident in AL and worked in Alabama and Iowa, there is number is box 16 on the Iowa W2 but they do not match what the total is in Box 1?  If I put the numbers from Box 1 into Box 16, its all kind of messed up.  Any suggestions?

[JotikaT2]

Do you have another state listed in boxes 15 and 16 on that same W-2?  If so, your wages had earnings withheld in both states.  

You would need to file 2 state tax returns and will file them based upon where you resided.  If you lived in Alabama while you worked in Iowa, you will file a nonresident state Iowa tax return.

Please see the attached link with steps to help you prepare your nonresident return.  Be sure to complete the nonresident state return first.  This will ensure you are able to claim a credit on your Alabama return for any income taxed by Iowa and Alabama and avoid any potential double taxation.

How do I file a nonresident state return

@dpmgoldengloves

[wtownsfma]

Thanks for the info. However, it didn't fix my problem. The W-2 is a travel W-2 that's only federal taxed and not state. Therefore, 15-17 is blank. So, the federal W-2s and the Alabama W-2 is not equal. What can I do now?

Winfred

[rkhartline]

Hi Lena, 

I am having the same issue with AL state rejection. I tried to correct the issue with the advice you listed above, but there's a small problem. I also worked in Tennessee, and TN is not an option in the drop down menu for state taxes. 

My AL return has been rejected three times, and it will not accept it without me selecting a state in the drop down....should I select AL?

[DMarkM1]

Add an AL line and put in wages in box 16 to make the total box 16 amounts match the box 1 amount.  Use the federal id number with no dashes in the state id block for the AL line.  TN does not tax wages so it will not be in the dropdown.  @rkhartline @wtownsfma 

[JohnHornbuckle]

Do any of the Intuit-affiliated folks here have the ability to talk with the developers about this issue?

It's clear from this and related threads that a LOT of people are having similar issues--and that these issues began prior to the 2020 tax year. TurboTax clearly just doesn't handle AL taxes very well, and we keep asking users to work around it in non-intuitive ways (no pun intended) instead of simply fixing the product.

[Zachseplow]

Even when Correct the information it doesn’t transfer to the correct form

[vsexyredmom33]

There  is nothing list on 15thr 17 it needs a state ID and there is none list for this w2 at all, AL is rejecting it like 5 times already. the company is based in Florida, Its for disability thru my job.