Won't be able to efile

[cmiller007]

I am filing joint and my husband is a w-2 earner and I am a LLC business owner. When I get to CA tax review, I get an error message that reads in part - "the return is ineligible for electronic filing. This return includes an LLC which is not a disregarded entity." When I open the forms detail, it shows a YES check mark for line 5 under Electronic Filing Review Check which says it is automatically transferred as YES if any of the following forms had entries (Form 3503,3507,3546,3553,3807,3808,3809,5870A). I have triple checked my entries and NO entries where made on any of those forms. When I try to override, it says I will NOT be able to e-file.

I would like to e-file and eliminate this error message, but I am at a loss.

Can anyone help?

[MonikaK1 · Accepted solution]

If you are filing a Schedule C and have a single-member LLC, treated as a disregarded entity, you should be able to e-file, unless there is some other reason for the error message. 

If you have an LLC that is treated as a partnership for tax purposes, you will need to file a partnership return and a Schedule K-1.

You may have inadvertently answered a question in the Schedule C section or on the California state return interview other than as intended, causing TurboTax to create additional forms. Try going back to the Schedule C, Self-Employment section and the CA state interview, and answering the questions again. Or, you could delete the California return and prepare it again.

See this TurboTax tips article for more information regarding LLCs.

If TurboTax has created forms in your return that are not needed, use the following steps to delete a form:

1. Open or continue your return in TurboTax.
2. In the left menu, select "Tax Tools" and then "Tools".
3. In the pop-up window Tool Center, select "Delete a form".
4. Select "Delete" next to the unneeded form and follow the instructions.

[cmiller007]

Thank you Turbo Tax. That worked!

[Smith16]

Hello,

I am having this same problem. Turbo tax says that I cannot e-file. But I am a SMLLC and as such a disregarded entity, i have earned all of my income in Ca. I have re-checked the boxes and and re-reviewed form 568. I can see nothing that should keep me from e-filing. Are you aware of any specific questions that might be a trigger other than the ones listed above? 

There is one question that is a bit unclear on the form 568; section U(2) and U(3) .

U2 says "are there any credits or carry overs attributable to the disregarded entity. " yes or no. Not sure what this applies to. Of course the Schedule C that must be filed has deductions that have been entered. But what are they referring to here. Does this mean like if your business had a loss carry over? 

U3 says "does the disregarded entity have  total income derived or attributable to Ca that is less than the LLC's total income from all sources"  ?? Not sure how to answer this yes or no? Do they mean did you take any tax deductions such as business expenses? Or are they asking if you had any income paid through the SMLLC that was outside of Ca.?

[MonikaK1]

Does your error message specify that you can't e-file because "the return is ineligible for electronic filing. This return includes an LLC which is not a disregarded entity", similar to the user in this thread who reported the issue last year?

Review your answers to the questions regarding the LLC to determine whether any of them would have caused TurboTax to generate additional forms that may not be eligible for e-filing. You can delete any forms that are not needed.

Form 568 questions:

U2 - it is asking specifically about credits and carryovers

U3 - yes, they are asking if there is non-CA income

See this TurboTax tips article for more information regarding LLCs.

If TurboTax has created forms in your return that are not needed, use the following steps to delete a form:

1. Open or continue your return in TurboTax.
2. In the left menu, select "Tax Tools" and then "Tools".
3. In the pop-up window Tool Center, select "Delete a form".
4. Select "Delete" next to the unneeded form and follow the instructions.

[Smith16]

Thank you. I did find two "untitled" and blank forms in the return and deleted as you suggested after review. I have no income outside of Ca. 

I get no information but am still prompted to check the box acknowledging that I cannot e-file. 

I do see the summary at the bottom of form 568 that provides  the reasons that one might not be able to e-file. I have reviewed all of these carefully. Here is the one item I am unclear about: U2 on form 568 says " if yes (a disregarded entity) -are there any credits or credit carryovers attributable to the disregarded entity. ". I'm not entirely sure how to answer this -yes or no. I DO have 179 carry overs in the past returns as well as this one. But of those I got a message this year from TT that I the business use portion of the depreciation of the asset no longer qualified as an expense. I have entered both yes and no on the form 568 to this and refreshed. And still I get a prompt that I cannot e-file the form 568 with out any other info as to why not. 

I'm stumped. 

[MonikaK1]

A Section 179 deduction is not a credit, so the answer to "credits or credit carryovers" would appear to be "no".

If the Form 568 is the only thing preventing filing, and troubleshooting steps don't resolve it, you could print and mail Form 568 to the Franchise Tax Board and remit the fee:

Franchise Tax Board
PO Box 1570
Rancho Cordova, CA 95741-1570

See this TurboTax help article and the Instructions for Form 568 for more information.

[Smith16]

Funny. Yes. I know. It would just be nice to solve the problem rather than just do the work around. The state wants you to e-file the form 568 not ask for the waiver because the TT program isn't working properly.  Or because they have not provided enough guidance as to what the issue might be. 

Also you provided the wrong address for the form 568. I will provide it here in case anyone else in the community is experiencing the same software problem. 

The address for the LLC tax to be paid to the state with the hard copy form 568 is FTB P.O Box 942857, Sacto Ca [removed]. Not the address provided in the reply below. 

[MonikaK1]

Thank you for sharing that address. The Rancho Cordova address I posted is shown in last year's FTB Instructions for Form 568.