Trying to efile but Turbotax will not let me because of SC tax paid greater than the SC tax income made. Looking for work around

[reyn0ldsj]

While working in OH last year the payroll company also taxed me in my home state of SC.  Since travel days were the only work considered as SC income my resulting W-2 has my SC income at 1/3 of the income tax paid to SC. Because of this Turbo Tax is telling me I have to file by mail, but since I have to file in 5 states and also file a Sch C, I would prefer not to mail in my returns.  Does anyone know a work around to allow me to efile?  

I have double checked this against my pay stubs and this info is correct.

Thanks!

[JohnB5677]

This screenshot clearly show the SC income is 3 times less than the tax withheld.

• TurboTax has correctly flagged this condition, and it has to be an error.
• First double check the posting of the W-2.

Log into TurboTax.

1. Under Federal
2. Click Wages & Income a menu will appear.
3. Select Job (W-2)
4. [Add/Edit]
5. You will see your W-2 posted earlier
6. Select [+ Add a new W-2]
7. Follow the interview to post the new W-2

On the SC W-2, are the wages in Box 1 greater than in box 16?

[reyn0ldsj]

As I stated in my original post.  I checked these numbers against my paystubs so it is not an error.

The wages in box 1 are higher than the wages in the SC part of box 16.  But the wages in box 1 minus travel days were taxed as Ohio income in a separate box 16 for OH not SC.  In hind sight I should have stopped the payroll company from taking the SC taxes out.

The w2 is correct.  Just looking for a work around so I can efile.

[MarilynG1]

I would recommend you delete this W-2 and re-enter it.  If you're using TurboTax Online, clear your Cache and Cookies after deleting, before re-entering.

Actually, it's a common situation where Box 1 total wages are earned in multiple states.  If the W-2 breaks out the Income/Tax Paid correctly, then there's no problem just entering what is on the W-2 as issued.

In your case, if you have wages in Box 16 for South Carolina, and a second line of Box 16 reports wages in Ohio, the two wages should total Box 1.  

Box 15 should have the state,  Box 16 State Wages, Box 17 State Tax.  Use the 'Add State' link to add as many states as you need to.  Remember that all your income is reported to your Resident State of SC, and you get a credit for tax paid to another state.  TurboTax does the calculations for you.  Prepare your Non-Resident return first. 

Here's more info on How to File a Non-Resident State Return

@reyn0ldsj 

[reyn0ldsj]

Thanks MarilynG1.  The W2 does include state taxes from OH, PA and SC that equal the amount in box 1, but the Desktop Turbo Tax software I use still doesn't allow me to efile.  It makes sense that Turbo Tax would flag it as a mistake but there should be a way for me to override flag once I verify that the w2 is indeed correct.  Once Turbotax forces me to go to the Post Office it pretty much loses its "Turboness."

Below is the response I received from the payroll company.  I think the work around they suggest is similar to your advise but I would still love for Turbo Tax to allow me to override this so I could properly efile all my taxes.  As the payroll company suggests in the end "It is highly recommended to get ahold of a Turbotax tax service representative as it is their software not accepting the current w2 for a multistate return."  But it seems all efforts to contact a "service rep" leads me down a wormhole of them trying to sell me more services.

"This is a case of having withholding, on out of state wages and results in a situation where if your where your earned wages

were mostly in other state(s). This would result in box 16 wages being lower than the box 17 state withholding.

What happens, is that withholding is given first priority to the work-state.

Then if your resident state has a higher rate than the workstate on a given payroll period, the resident state takes the difference from the rates between the work-state and the resident state.

When it involves multiple states withholding, filling programs that were intended for single state use would flag that as an error (as it makes sense for that instance if you only had wages in one state but more withholding was taken than wages).

I believe the workaround on turbotax is to file the non-resident state returns and then finish by filing for your homestate. It is highly recommended to get ahold of a Turbotax tax service representative as it is their software not accepting the current w2 for a multistate return."

[AmyC]

I have a workaround thought - you could change the w2 SC tax withheld to a lower number on the w2 and then enter the remainder as other tax payments to SC. The IRS has the w2 with the correct amount for the totals to match up and the program will behave.

You can enter other tax payments made:  

1. federal tax deductions section  
2. Estimates and Other Taxes Paid. 
3. Select Other Income Taxes. 
4. Select withholding not already entered. 
5. Enter the state and amount.