Common W-2 and State Tax Filing Issues in ProConnect Tax (IL, CA, MA, PA)

This guide outlines common issues ProConnect Taxusers encounter with W-2s and state tax filings in Illinois, California, Massachusetts, and Pennsylvania.

General W-2 Issues

• Incorrect or Missing Information: Always verify W-2 accuracy. If information is missing, contact the employer. Common errors include:
  • Incorrect Social Security numbers
  • Wage amounts
  • Withholding.
• Multiple W-2s: If a taxpayer has multiple W-2s, ensure all are entered into ProConnect Tax to avoid underreporting income.
• Late W-2s: If a W-2 is received after filing, an amended return (Form 1040-X) may be necessary.

State-Specific Issues

Illinois (IL)

• Reciprocity with Iowa, Kentucky, Michigan, and Wisconsin: Illinois has reciprocity agreements with these states. Ensure you're claiming the correct credits if your client worked in any of these states. See here for more info.
• Local Taxes: Illinois has numerous local taxes. Ensure you're correctly accounting for these based on the taxpayer's residence and work location.

California (CA)

• High Income Tax Rates: California has high income tax rates. Ensure accurate withholding to avoid a large tax bill.

Massachusetts (MA)

• Non-Resident Income Allocation: If your client is a non-resident with income from Massachusetts sources, ensure accurate allocation of income to avoid overtaxation.
• Reciprocity with New Hampshire: Massachusetts has reciprocity with New Hampshire. Ensure proper handling of income earned in New Hampshire.

Pennsylvania (PA)

• Local Taxes: Pennsylvania has local Earned Income Taxes (EIT). Ensure accurate reporting based on the taxpayer's residence and work location.
• Uniformity Clause: Pennsylvania's Uniformity Clause impacts how certain income is taxed. Understand its implications to avoid errors.