State tax withheld in error

[mike4]

Client is a non-resident and did not work in IL, but the employer withheld IL state income tax. Lacerte says that the return cannot be e-filed. Is there a way to still e-file the state tax return?

[sjrcpa · Accepted solution]

Did you try setting up a nonresident return and entering the withholding?

[mike4]

I did set up an Non-Resident return. I get an error/diagnostic that the state wage amount cannot be less than the state withholding. I am hoping to be able to e-file if I can get around the diagnostic.

[rbynaker]

Yeah, some states are quirky like that.  Can't exactly blame them with all of the fraud.  I've run into this a couple times with VA and just had to paper file (with W2 attached and a statement that employer withheld in error, blah blah).

@garman22  sounds like IL doesn't like efiling these either.  Does it have to be paper filed?

[garman22]

Super weird.......I've never seen no wages with Illinois tax withheld. Im willing to bet a paper file is in order.

[rbynaker]

I've seen employer screw-ups a lot.  Some of them just don't want to admit that they have an employee working in another state (then suddenly they'd have nexus!)  Sometimes it's just that the right hand doesn't know what the left hand is doing.  i.e. Milton got pulled off of this project in the CA office and moved to VA but nobody bothered to tell payroll.

[garman22]

That I've seen and dealt with but never zero wages and a dollar amount in withholding. I'd swear if I saw that I'd bet on human error on that one.

[George4Tacks]

I had a client that took YEARS to get this fixed. I gave them paper return for the state every year. They got a letter from the state every year to explain why there was no income but withholding. I helped write the letter to the state every year. 

Get your client to fix this right after they pay your bill for the paper return.