How to resolve Lacerte diagnostic ref. 12550 - CA taxpayers estimated or extension payment

For more estimated tax resources, check out our Tax topics page on Estimated Tax payments where you'll find answers to the most commonly asked questions.

This article will help resolve the following critical diagnostic:

• "Taxpayers with an estimated tax payment or an extension payment in excess of $20,000 or who have a tax liability that exceeds 80,000 must remit all payments regardless of the amount, type, or taxable year using one of the following electronic methods: FTB's Web Pay, Electronic Funds Withdrawal (EFW) when e-filing, or pay by credit card. Check the box 'Requires electronic payments' (Screen 3, Code 1105) to include sections in the filing instructions and client letter instructing the taxpayers to transmit payments to the FTB electronically using one of the above methods. Also, checking the box 'Requires electronic payments' (Screen 3, Code 1105) suppresses forms 540-ES and/or 540-V. This diagnostic won't prevent the return from being electronically filed."  (ref #12550)

Follow these steps to resolve this diagnostic:

1. Go to Screen 3, Miscellaneous Information/Direct Deposit.
2. Scroll down to the California Miscellaneous section.
3. Scroll down to select the box Participant in EFT/Web Pay Program (code 1105).

Lacerte will include sections in the filing instructions and client letter instructing the taxpayer to transmit payments to the FTB electronically using either FTB Web Pay or paying by credit card, rather than submitting paper checks with the tax return or estimated payment vouchers.

The client letter and filing instructions remain unchanged for returns that are electronically filed, and both boxes for Electronic payment of balance due and Electronic payment of estimated tax have been selected. Select the box for Requires electronic payments to remove the related diagnostic.

Per the CA Form Instructions

Any taxpayer required to remit a payment electronically who pays by other means shall pay a penalty of 1% of the amount paid unless it is shown that the failure to make a payment as required was for a reasonable cause and wasn't the result of willful neglect.

Disaster area tax relief available:

Filing deadlines and estimated tax due dates may be extended for taxpayers in parts of Alabama, Alaska, California, Florida, Georgia, Kentucky, North Carolina, South Carolina, Tennessee, Virginia, and IRS for taxpayers living abroad. See here for more details.