E-file rejection of California nonresident tax return - rejection notice indicates Form CA (540NR) Line 8z, requires a description.

[bchansen]

How do you resolve this problem?

[Just-Lisa-Now-]

what do you have in the other income line of Form CA?

[bchansen]

termination payments.

[bchansen]

The words "termination payments" with the figure are on that line.

[Just-Lisa-Now-]

why would termination payments be on the other income line? what exactly happened? did they receive some type of reporting document, 10099MISC? 1099NEC? anything??

[bchansen]

The client received 1099-MISC's from State Farm Insurance companies.  he did not receive 1099-NEC's because he is not self-employed any longer.  Insurance agents receive special IRS treatment on these types of payments.  See IRC section 1402(k).  California apparently doesn't know about this.  it asks for a "description" of the other income item.  The description is, in fact, termination payments.  But this is not accepted as the return continues to be rejected when tried to be e-filed.

[Just-Lisa-Now-]

Did you fill out the 1099MISC worksheet? that may solve your issue.

[bchansen]

These worksheets were filled out under the federal return section in ProSeries Professional.  All were labeled as Other Income and not linked to any other worksheets (such as Schedule C or E).  They should have transferred to the California section automatically.  This was done but the rejection still happens.

[Just-Lisa-Now-]

I think its the typed in description that's the problem, does CA insist that you label it? It gives an error in the description line until you fill it in?

I have car salesmen that get spiffs on a 1099MISC, marked as other income on the federal and it carries over to CA and I dont need to type any description, they EF fine.....maybe its the nonresident thing that makes it a problem,

[bchansen]

I think you may be right about the nonresident return being the problem.  Without the description, the return does not pass the review test in order to e-file.  ProSeries has no solution to this problem as I had contacted them first.  I will have to paper file the return at this point.

Thanks for helping.