E-filing Issue with W-2 Box 12, Code II Medicaid Waivers Payments

[CPA21]

Hi,

Proseries is currently unable to e-file the 1040 when there is a W-2 with $0 in Box 1 due to excludable Medicaid waivers payments reported in Box 12, Code II. This appears to be a new reporting format for 2024. Does anyone know how to get around this or will the return have to be paper-filed? 

Please see diagnostic message below:

Your client's return is not eligible for electronic filing due to the following reasons:

One of the W-2s doesn't have an amount in box 1 or the amount is less than $1.

[Just-Lisa-Now-]

Does the W2 need to be included at all?  Does it make a difference to the return? 

When people bring those W2s with nothing in Box 1, I just disregard it, I guess if that particular W2 creates excess SS tax then that would be a different situation, but none of my clients fall into that situation that also have the Medicaid waiver income.

[shercri]

Thank you, Lisa, for your insight. I had the same issue today and didn't know how to handle the issue. W2 had only an amount on 12a with code II and the other boxes are all zeros. The system gave me an error message (not eligible for electronic filing) since box is less than $1.