Other Subtractions: "MD - Ref #2696" Critical Diagnostics

[Omotayo]

Please, can some assist me with this "MD - Ref #2696" critical diagnostics - see below. I cannot seem to figure out what I did wrong. I know it not advisable to ignore such diagnostic but is this one of those that can be ignored?

"MD - Ref #2696" Critical Diagnostics:

For electronically filed returns, the state of Maryland does not allow "Other Subtractions" for which there is no corresponding state letter code assigned by the state. This return must be filed as a conventional paper return. Other Subtractions that are not allowed for electronically filed returns:Other Subtractions input by the user, Maryland Wage Adjustment, NOL Adjustment, Lottery Winnings, IRA Adjustment, Pension Adjustment, Gambling Adjustment, Qualified state tuition earnings adjustment.

Thanks in advance!

[DebiHCPA]

There is a worksheet called "Other Subtractions". Do you have anything on this worksheet? Did you override any numbers? Sometimes half the battle is finding where to put the input. What is it you are trying to subtract?

[sjrcpa]

There is a long list of MD subtractions and each one has a corresponding letter or double letter. Your subtraction needs to fit one of those or you can't efile.

[Omotayo]

Thanks for your response! The subtraction amount matches the MD college fund and filer's ESPP amount from his W-2. I cannot think of anything else. How can I resolve it please? 

[sjrcpa]

What kind of subtraction is "filer's ESPP amount from his W-2"?

[DebiHCPA]

What are you referring to? Are you talking about the taxpayer's contribution to his 403b? If so you need to scroll down between q and r and there is a worksheet to keep track of the employee's contribution to the plan. It is called the "pickup contribution amount "smart" worksheet". (all of these worksheets think they are so smart!). Usually you would do this in the first year. Then eventually you will see the 1099R says ESP used which means it is all taxable from that point forward.

I hope this is what you are referring to. Otherwise delete the response.

[DebiHCPA]

Sometimes you need to go back to the taxpayer and ask him what the code is. Usually I find that it relates to a contribution to a state retirement program.  I have never seen that code relate to a 529 contribution. I think you might need some more information to determine if it is indeed a subtraction. If it is related to a state retirement program then it might be a state pickup amount and that addition is determined on the W-2 worksheet in the federal program.

[Omotayo]

Hi, it is employee stock purchase plan (ESPP). Thanks!

[Omotayo]

The code on the worksheet is "xb". 

[DebiHCPA]

I don't usually see an employee stock purchase plan subtraction and I don't think it would go to "xb". So not sure if you are now asking two separate questions.

[sjrcpa]

So why do you think Employee Stock Purchase Plan is a MD subtraction item?

[sjrcpa]

@DebiHCPA  I think OP is saying there are 2 MD subtractions- one for 529 Plan and one for ESPP.

[DebiHCPA]

I usually find on a W-2 that the State Pickup is the only item affected as a modification on the MD return. Otherwise, I am not sure why there would be an adjustment for ESSP.  

Maybe we have to start back at the beginning. What is the question?

[Omotayo]

Hi, the MD 502SU is showing subtraction for xb (Maryland College Investment Plan) - I don't think this is the issue - and Miscellaneous Subtractions of $ 525. I cannot seem to figure out where the $525 generated from. I thought it was from the W-2 because I had the same amount in box 14 (ESPP) but I purposely deleted the amount on the W-2 and the Miscellaneous Subtractions of $ 525 still appeared on the MD 502SU. 

[DebiHCPA]

What line on the MD SU is showing the subtraction? 

[Omotayo]

The amount is showing on 502SU as "Miscellaneous Subtractions", and on the Statement 1as "Taxpayer: Wage Adjustment" on the MS statement - please find attachments. 

[sjrcpa]

Check your W-2 entry. Do you have an amount in state wages that is different than Box1 wages? If yes, delete it. MD doesn't work that way. Any adjustment to MD wages, such as the state pickup amount, gets its own code on the SU.

[DebiHCPA · Accepted solution]

If you can't figure out where that number is I would back up the return. Then I would delete the entire W-2 and start again. Enter everything exactly as it appears on the W-2. If there is a state pickup it will show in box 14. But before I would enter that W-2 I would go to the MD return and see if that subtraction is still there. If it isn't then you know there was something quirky with the W-2. If it is gone, then it was the input of the W-2. 

Don't check any boxes unless they are checked on the W-2.

[Omotayo]

RESOLVED!!!😁😁😁

Thanks to you guys! 

I deleted one of the W-2 and the error was resolved. I then reentered it and discover that the error was generated because the state wages (box 16) was lower than the wages in box 1. It was the reduced wage all along...

Thanks again for your guidances!