CA form 3804-CR does not seem to work properly for PTE tax

[Danb2]

I am preparing an individual CA return. The taxpayer has PTET credit for PTET paid in CA. On form 540, the credit is appropriately capped on line 44 (code 242) to reduce tax to 0 (since in CA, PTET is not refundable). However, in form 3804-CR, the full PTET is shown as "credit claimed" on row 4, and hence carryover is calculated as 0. This form does not even allow overrides on these rows, so there is no way to fix this. Has anyone encountered this? Am I missing something here?

Separately, I noticed the PTET credit is not offsetting the Mental Health Services tax, so while income tax is reduced to 0, the taxpayer still needs to pay Mental Health Services tax. Hopefully ProSeries got that right.

Many thanks for your input

Dan

[BLN]

Dan, I agree, the CA Form 3804-CR, Part II, Line 4 is incorrect, it should equal the Form 540 Line 44 PTE credit. Spidell weighed in on my fact pattern and they agree there should be a PTE credit carryover. 

I spent about 2 hours on the phone with Proseries technical, they reviewed the return and believe the software works fine. Their solution is to change the PTE credit input on the K-1 to equal the lesser amount of Form 540 PTE credit. Not a good idea since the taxpayer's PTE credit carryover would be zero and incorrect.  

I asked Proseries to change the 3804-CR, Part II, Line 4 and 5 so we can correct the amounts with Overrides, they refused to escalate the matter and they won't do anything to resolve this problem. 

Very frustrating to pay so much $ to Proseries and we're talking to a wall. 

[Danb2]

Thank you for the response. I will try calling them as well - when I have 2 hours to waste 😞

Fully agree with you, for how much we pay, it is crazy they would not fix an obvious error, and offer a non-solution instead. I am not sure of the logic of not allowing an override when you can override just about any cell in any form.

Dan

[Danb2]

I called technical support and figured out how to override the cell. You need to do it in Schedule P, section IV, line 242. You override the number in column b by putting in the amount taken as credit in Form 540 and then this will correctly carry to Form 3804 which will also then correctly calculate the carryover. 

[BLN]

Thank you very much for squeezing this information out of technical support and posting too! I have about a dozen returns with this issue so it's super helpful to have an override solution. 

[sariscpa]

The saga continues with the 2024 3804-CR. The form is now showing the incorrect amount on line 4 for the carryover to 2025, although the correct amount being used is on form 540 line 44. The problem comes from also having a credit for taxes paid to other states. Form 3804-CR is (erroneously, I think?) reducing the amount of credit claimed this year by the OSC (only on the 3804-CR, not on the main tax return.) Interesting: this also happened RETROACTIVELY to the 2023 software (but not 2022.) So the 2023 Proseries return in my software is not what was actually filed on 4/15/24. I called Proseries and they said that this was due to a retroactive law change. They could not say what that was, only that the only way the software would change retroactively is due to a law change. Also of note, the 3804-CR and instructions are not yet available on the CA website. It says "coming soon." So #1) watch your carryovers from 2023. #2) This time there is no way to override the Schedule P credit statement to get the correct amount to show up on the form as we did in 2022. #3) Does anyone know what this retro law change is?