What are the IRS rules that prevent you from e-filing your federal return if you make federal tax withholding adjustments?

[chrisdaley82]

I am in a RDP. I was able to e-file last year with TurboTax online software even though I made federal tax withholding adjustments. Has something changed with the IRS rules, TurboTax software capabilities, or is this TurboTax message just wrong?

The exact message on the community property income tax withholding adjustments page is: "Note: If you make any federal tax withholding adjustments you will not be able to e-file your federal return according to IRS rules. You will need to print and mail in a paper copy of your federal return."

[Mike9241]

are you asking about adjustments for the W-4 or changing withholding as reported on tax forms? w-4 will not create a problem. changing on actual tax forms like a w-2 will. 

[chrisdaley82]

This is about community property income and tax withholding adjustments, as explained in Form 555 and TurboTax help: https://ttlc.intuit.com/turbotax-support/en-us/help-article/taxation/prepare-rdp-return-live-califor... . I don't understand why TurboTax is saying that you can't e-file if you make tax withholding adjustments, especially since I e-filed last year and my return had tax withholding adjustments.

[KrisD15]

To clarify, is this for your Federal returns or state?

Which State?

With a RDP, you would only make adjustments on your state return, not either of your federal returns. 

[chrisdaley82]

This is for the federal return. I am in a RDP and live in CA. Your statement is incorrect, we must make adjustments on the Federal return. The following are taken from IRS Form 555:

"Registered domestic partners in Nevada, Washington, or California must generally follow state community property laws and report half the combined community income of the individual and his or her registered domestic partner."

"Federal income tax withheld. As a general rule, each RDP is entitled to credit for half the income tax withheld from wages that are community property"

[SusanY1]

You will need to mail your return.  

The rule is that when W-2 withholding adjustments are made, the return must be e-filed since the data will not match the IRS computer database.  That data must be verified before refunds can be approved. 

There's an exception to the e-file stop for returns for married individuals filing separately, because the IRS can cross-reference using the other spouse's provided Social Security number.  However, this can't be accomplished for parties in Registered Domestic Partnerships since there is no way to supply the other party's Social Security number on the return. 

 

[chrisdaley82]

Thank you Susan. Can you point me to the official text please?

You mentioned that the IRS cannot cross-reference if there are adjustments. I think they can and that is exactly the purpose of IRS Form 8958. This form must be filed with my federal return and has both my Social Security Number and my domestic partner's Social Security Number. It gives an itemized breakdown of how our individual income and tax withholdings are combined to give our community income and taxes paid. TurboTax sent this form with my e-filed federal return last year.

[MonikaK1]

You should be able to enter your W-2 on your individual Federal return in TurboTax as it is shown on your W-2 form, and then make adjustments on Form 8958. Is this what you did last year, and you were able to e-file? Where are you seeing an error message?

According to this IRS FAQ article:

Registered domestic partners should report wages, other income items, and deductions according to the instructions to Form 1040, U.S. Individual Income Tax Return, and related schedules, and Form 8958, Allocation of Tax Amounts Between Certain Individuals in Community Property States.

This older TurboTax tips article on RDP still has some good information.

Regardless of what state you live in, each domestic partner prepares a separate federal return based on the Allocation Worksheet that you attach to it. You might consider including an explanatory note to remind the IRS of your situation.

The creation of a “mock” federal return that reflects joint-filing status is just to get the numbers you need to fill in the sections of your state return that use numbers from a "married filing jointly" federal return. This ”mock” federal return never goes to the IRS; you submit it with your California state return.

See here for California FTB information on married or RDP filing separately.

[chrisdaley82]

Yes, that is our situation this year and last year.

Last year, I was able to e-file with TurboTax. This year on the "Tax Withholding Adjustments" community income page it tells me:

"Figure out your RDP community property income tax withholding. Compare it to your actual withholding to see how much you need to adjust here.

Report your tax withholding addition adjustment and/or you subtraction adjustment below. Note: If you make any federal tax withholding adjustments you will not be able to e-file your federal return according to IRS rules. You will need to print and mail in a paper copy of your federal return."

I think this is an incorrect TurboTax message. I do not want to be forced to paper file via TurboTax for this incorrect reason, especially if I could e-file via https://www.freefilefillableforms.com .