Non-wage withholding common errors September 2019 Tax News

You prepared your client’s tax return with all the information you had available and now they have a Notice of Tax Return Change.  The notice reports they were not credited with the withholding they reported. Below are some of the most common errors that occur resulting in the taxpayer not receiving their credit:

• The incorrect tax year form was used. The year of the tax form(s) and the year of the withholding must be the same. The most current forms are available online.
• The taxpayer identification numbers are not the same on the Form and the return. It is important that the SSN/FEIN listed on the form matches the SSN/FEIN on the return so we can match the form to the account.
• If the payee is a grantor trust, the form should have the name and SSN or ITIN of the grantor that is required to file a tax return and report the income. Do not enter the name of the trust or trustee.
• If the payee is a non-grantor trust, the form should have name and FEIN of the trust that is required to file a tax return and report the income. Do not enter the name or SSN of the individual or trustee.
• The withholding agent filed Form 592-B instead of Form 592. When the withholding agent does not fulfill their requirement of filing Form 592, FTB does not know where to allocate the withholding. This results in your client’s withholding credit not being available when the return if filed. 

In all of the above situations, you have two options:

• Call the withholding agent to get the correct information filed.
• Call Withholding Services and Compliance Section to help get the correct information filed, and update the systems accordingly. 

In each instance above, the form will need to be amended for corrections. If you notice any of these errors prior to filing the return, please reach out to us and we will do our best to assist you in getting the correct forms in place prior to the filing of the return. Connect with us.