Level 1

answer was:  PTax Year 2016 and Prior The state of California does not currently allow Form 540X refunds to be applied to next year's tax. Note: Form 540X has been replaced with Schedule X beginning Tax Year 2017;

Okay then why no diagnostic because Lacerte carried over the additional refund to 2018 and caused a problem on the 2018 return which we found out via a FTB notice.

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Level 15

What did line 35 of the 540X state? Where did the change in amount applied to 540ES show on the 540X? Did the client get their refund from the amended return? Did the client let you know that they got the refund that you said would be applied to the next year?  

This is one of those cases where the paid professional earns their fee. Accommodate the client and pay any penalties that they incur and make a note that you will not do it again. Lacerte (or any tax software) is simply a tool. It is our job to make sure the tool does things correctly. 


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