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How to resolve Lacerte diagnostic Ref 35739 and Ref 40079 - AL individual wages from all sources on Form 40

SOLVEDby IntuitLacerte Tax11Updated August 25, 2022

This article will help resolve the following e-file critical diagnostics, Ref. 35739 and Ref. 40079:

  • "e-file: The wages from all sources reported on form on Form 40 or 40A column B must match all wages as reported in box 16 of the W-2." (ref. #35739)
  • "e-file: The wages from all sources on Form 40NR column B must match all state wages from box 16 of the W-2. Check that each state identifier in the Electronic Filing W-2 box 15 input section have wages sourced to that state." (ref. #40079)

These diagnostics will generate for a multi-state return when:

  • Information doesn't match on Screen 10, Wages, Salaries, Tips
  • Wages are entered for a non-income tax state identified as US.
  • Wages are allocated using the source column.

To see if there's a state mismatch on Screen 10:

  1. Go to Screen 10, Wages, Salaries, Tips.
  2. Select the first W-2 listed in the top-left menu, and hold down Ctrl+E in Wages.
    • Make sure the correct state abbreviations are listed in the State(s) column, and update it if they're missing or incorrect.
  3. Select the Employer Information (MANDATORY for e-file) section from the lower left menu.
    • Hold down Ctrl+E in the field Employer state ID no. (Ctrl+E if multi-state W-2).
    • Make sure the correct state abbreviations are entered under the (15) State column (the states should match the states you reviewed in the previous steps). If a state abbreviation is missing or incorrect, make sure to update it now.
    • Make sure the correct state EINs are entered under the (15) State Employer ID No. column. If a state EIN is missing or incorrect, make sure to update it now.
  4. Select the section Electronic Filing (W-2 State/Local) from the lower left menu.
    • Make sure the correct state abbreviations are entered under the (15) St column. The states should match the states you reviewed in the previous steps. If a state abbreviation is missing or incorrect, make sure to update it now.
    • Make sure the correct state EINs are entered under the (15) Employer's State ID Number column. If a state EIN is missing or incorrect, make sure to update it now.
  5. Select the next W-2 from the top-left menu.
  6. Repeat the steps above for each W-2 listed.

If wages are entered for a non-income tax state identified as US:

If wages are entered for a non-income tax state and identified as US, for example, the taxpayer is a full year resident of TX and wages are entered with US, follow these steps:

  1. Go to Screen 10, Wages, Salaries, Tips.
  2. Select the applicable W-2 listed from the top-left menu.
  3. Scroll down to the Electronic Filing (W-2 State/Local) section.
    • Enter the state abbreviation under the (15) St column.
    • Enter the State EIN under the (15) Employer's state ID Number column. If the state doesn't have an EIN on the W-2 you can try to enter all 9's.
    • Enter the (16) State Wages, Tips, etc. [O] for each state listed.

If wages are allocated using the source column:

If you've sourced state wages using the S in the Source column and the Alabama/Federal, and other state returns are all correct, disregard this diagnostic and and refer here to e-file your return.

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