2023 CA Counselor Reference Manual

Go to the W-2 page [Income > …]

• Pages D-8 through D-10 of Pub 4012 have information on how to enter Form W-2 information in TaxSlayer.

Substitute W-2

• Note:  Certain Medicaid Waiver Payments (MWP) are not reported on a W-2 (because no tax of any type was withheld), yet may still qualify the taxpayer for EIC. The IRS has instructed such taxpayers to treat the income as if on a W-2 (based on their last pay stub) even if they didn’t receive a W-2 for these payments. Note:  The IRS has not specifically said to “create a substitute W-2” for such income, but is a clear way to achieve the result. See the section W-2 Form – Excludable Medicaid Waiver Payments, page 28, for MWP details, then (possibly) the instructions below.
• Otherwise, if the taxpayer hasn’t received a Form W-2 by February 15th, and has tried and failed to get a copy from the employer, they can contact the IRS for possible assistance (800-829-1040 or in-person visit).
• Alternatively, a substitute Form W-2 can be used. This requires a pay stub for the last pay period for which pay was received in the tax year, showing cumulative pay, and withholding for the year.

• Start a W-2 page, as usual, but select “This is a substitute W-2.” 
• Fill out the rest of the TaxSlayer W-2 page as usual, except:
• If the employer EIN is unknown, leave that field blank and see the next main bullet point.
• CA process note: If the CA state EIN is not known, use “999999.”  Do not leave this field blank; that will prevent the income from being used to calculate CalEITC.
• When you click “Continue”, TaxSlayer will open a page to collect additional information for Form 4852. 
• If the employee has an ITIN, do not enter an SSN. 

• A return with a substitute W-2 where the employer EIN is unknown must be paper-filed - create a note (page 8) saying that. 

• The taxpayer must sign Form 4852, automatically printed by TaxSlayer, which goes with the paper federal return. 
• Note for CA state returns: The taxpayer must also sign CA Form 3525, which goes with the paper CA return. 

• The taxpayer may need to follow up with the Social Security Administration to get credit for FICA taxes paid.

• The taxpayer should wait until they get an SSA statement that includes the tax year for which the return is being prepared before contacting SSA. 
• If the SSA statement shows that the employer failed to report wages to the SSA, the taxpayer should provide the SAA with a copy of the Form 4852. 

• If the taxpayer later gets a W-2 with different information on it, the taxpayer may need to amend the tax return. 

W-2 Form - Employee Name

• If this is a MFJ return, make sure the “Whose W-2 is this?” question has been answered correctly. (The default is the taxpayer.)
• If the employee’s name on the Form W-2 does not match the name in the Personal Information page (for example, because of a name change), it is not possible to change the name on the TaxSlayer W-2 page to match the paper Form W-2. In this situation:

• Make sure the Social Security number on the paper Form W-2 matches the SSN in TaxSlayer. If it doesn’t match, then (assuming the form does in fact belong in this tax return) see the next section below.
• If the SSN is correct but the name is wrong, the return should still be e-filed. The taxpayer should contact the employer to get their name changed so that next year’s W-2 is correct.

W-2 Form - Employee SSN 

• If the employee on the Form W-2 is filing using an ITIN, then any SSN on the paper Form W-2 will not be valid for that employee.

• If TaxSlayer has an ITIN for the employee on the Personal Information page, then it will automatically ask for “ITIN SSN” information on any W-2 page for that employee. Type in the SSN shown on the paper Form W-2.
• In this situation, the return can still be e-filed.

• If the taxpayer has an SSN but a different (incorrect) SSN is on the paper Form W-2, the employee must request a corrected Form W-2 from the employer.

• If a corrected Form W-2 cannot be obtained, do not change the correct SSN on the TaxSlayer W-2 page to match the incorrect SSN on the paper Form W-2.

• The return must be paper-filed, and an explanation provided about the erroneous SSN; create a note in TaxSlayer (page 8) with that information.  Either print that note or draft a separate explanation for the taxpayer to mail with their return. To create a Preparer note, go to the Preparer Note page [Miscellaneous Forms > Explanations > ...].

• Note: A Form W-2 with a blank in the SSN box is invalid. If the taxpayer has such a Form W-2 and cannot get it corrected, the return is out-of-scope.

W-2 Form – Employee Address

• If the employee address on the paper Form W-2 doesn’t match what TaxSlayer fills in, on the W-2 page (information taken from the Personal Information page), then change the information on the W-2 page in TaxSlayer so it matches the paper Form W-2.
• If the information on the paper Form W-2 is simply not current (the employee has moved, or just changed the mailing address), no further action is required for the federal return.  Advise the taxpayer to update their address with the employer.
• If the information on the paper Form W-2 is correct and the information in the Personal Information page is wrong, go back to the Basic Information section and change the taxpayer address.

• This correction will not affect TaxSlayer pages that have already been created. You will need to go back and make corrections to those pages. 

• If the information on the paper Form W-2 is current but incorrect (for example, the wrong street number), discuss with the taxpayer whether the employer has been notified of the need to make a correction.

W-2 Form - Employer’s ID, Name, and Address

• If employer information has been entered in another return at the same site during the current or prior year, TaxSlayer will fill in employer name and address after the employer's identification number (EIN) is entered.

• Make any changes necessary so that the information on the W-2 page matches the paper copy. (Some employers use the same EIN for W-2s with different employer addresses.  Also, companies move.)
• Ampersands (&), hyphens (–), and slashes (/) are allowed in the employer’s name field.

• If the EIN field on the paper Form W-2 is missing:

• Do not create a bogus number or enter a Social Security number for the EIN; that will result in the e-filed tax return being rejected by the IRS.
• The taxpayer should contact the employer to get a valid EIN (but also see the next section, “Incorrect EIN”.)  In rare cases, you may be able to get the EIN from an internet search, or from the return of another taxpayer at your site who worked for the same employer (more common).
• If the employer is no longer in business, or the taxpayer is otherwise unable to get a valid EIN, the return must be paper filed; create a note (page 8) saying that. 

• CA process note: Form W-2s issued by California In-Home Supportive Services (IHSS), now located in West Sacramento, at PO Box 1717 (EIN 94-2629822), will show the name of the person being cared for (often a relative) as the employer. For such W-2s, if TaxSlayer fills the Employer Name field, that field will almost certainly need to be changed. . The state EIN will also have to be changed.
• If the employer (person receiving care) and the employee (taxpayer) reside in the same home, see also the section W-2 Form – Excludable Medicaid Waiver Payments on page 28. 

• Boxes 15 and beyond: See the section W-2 Form - State Information on page 31.

Incorrect EINs 

• Unfortunately, occasionally an EIN is entered incorrectly. After the e-filed return is rejected by the IRS, the ERO or preparer normally must call the taxpayer to get the correct number. But sometimes it is possible to find the correct EIN online, so that the taxpayer doesn’t need to be called. 

• In TaxSlayer, in the Reports section, under “Other Data Reports”, is the EIN Report, which lists, by employer name, all EINs entered in all returns done at the site during the tax year. Note that this report is available for the three prior years as well as the current year. 
• Other sources for EINs, online, are:
• Nice user interface, quick to check: eintaxid.com
• Bogart “EIN database” (list)
• The IRS has a database of registered charitable organizations, best searched via melissa.com/v2/lookups/npo/
• If an EIN that is found in an online search isn’t very close to the number entered in TaxSlayer, don’t use it. Instead, call the taxpayer to get the correct EIN. 

W-2 Form – Entering Information

• Enter information from the paper Form W-2 in TaxSlayer exactly as shown on the paper form, unless otherwise stated below.
• The amount entered in box 1 will populate boxes 3 through 6, plus 16 (after the State Name has been selected.)
• If the amounts in boxes 3 through 6 do not match the paper Form W-2, change the amounts on the TaxSlayer page so that everything does match.  Rounding is ok.
• If the amount in box 1 is subsequently changed, the change will affect the amounts in boxes 3 through 6.

• Note for CA state returns: When you change the amount in box 1, TaxSlayer will not change box 16, state wages, which is used to calculate CalEITC. Normally, if you change the amount in box 1, you should make a manual change to the box 16 amount. However, be aware that sometimes box 16 should not equal box 1, as discussed in the section W-2 Form - State Information on page 31.

• Normally, if there are different (non-zero) amounts in boxes 1 and 5, the difference will show up (be explained by) an entry in box 12. However, when an employee is making a mandatory contribution to a qualified retirement account, such as a 403(b), box 1 will be different from boxes 3 and 5, but there won’t be a related entry in box 12.
• If box 1 shows zero wages, the Form W-2 may be to report employer-paid sick pay or disability payments (all nontaxable), or IHSS payments which the state knows are nontaxable. (Look at box 12 for code J.) Do not enter this W-2 in TaxSlayer! It will cause an e-file reject.

• If there was any federal withholding (box 2), go to the Other Federal Withholdings page [Federal Section > Payments & Estimates], enter the amount, and click “Continue.”
• If there was any state tax withholding, enter it as described in the section State Tax Withheld, page 118 [and ignore the restriction that the process is not supposed to be used for wages reported on W-2 forms, because this Form W-2 isn’t being entered in TaxSlayer].

• Box 7: Social Security Tips are reported here.  
• If there is an amount in box 7, the amounts calculated by TaxSlayer and shown in boxes 3, 4, 5, and 6 on the data entry page may not match the amounts on the paper Form W-2. If the amounts in TaxSlayer do not match, change them. 
• Box 8, Allocated Tips: When an amount is entered here, TaxSlayer automatically adds Form 4137 to the tax return, and computes the Social Security and Medicare tax due (Line 5 of Schedule 2.) 
• Box 10: Dependent Care Benefits from the employer are reported here. It is VERY important that this number, if present, be entered accurately, because it directly affects other benefit calculations.
• If you enter an amount in box 10, then, after clicking “Continue”, TaxSlayer will display a message: “In Box 10 you entered an amount for Dependent Care Benefits. Please be sure to complete a Form 2441 for this return.”
• If dependent care benefits paid by the employer are not fully offset by expenses, as entered on the F2441 - Child Care Credit - Page 1 page, the difference will be included as income on Form 1040, Line 1e; see the section Schedule 3, Line 2 - Credit for Child and Dependent Care Expenses on page 91.
• Taxpayers won’t get a Child and Dependent Care credit for expenses paid via employer deduction, because the box 10 amount already has tax benefits – it reduces taxable income (box 1).
• Unreported tips: If the W-2 is for a job that is likely to have tip income as part of employee compensation, see W-2 Form - Tip Income, page 30.
• Box 12: If a code in box 12 is out-of-scope, the entire return is also out-of-scope.

• If there are more than four box 12 entries, there is a workaround:

• Enter just the first four entries on a TaxSlayer W-2 page, along with all other information on the paper Form W-2.
• Reduce the amount in box 1, “Wages, Tips”, by $1. [The change won’t affect amounts in any other boxes of the TaxSlayer page.]
• Click “Save & Enter Another” to save information entered in the W-2 page.
• On the second W-2 page:
• Enter the same employee and employer information as on the first W-2 page.
• In box 1, “Wages, Tips”, enter $1. Then delete that amount from boxes 3 and 5. (If it appears in box 16, delete it there as well.)
• In box 12, enter the information you did not have space to enter on the first W-2 page.
• Click “Continue” to save information entered in the second W-2 page.
• As a precaution, the program will ask you if you are sure you want to create a W-2 page with the same EIN as a previously created W-2 page. Check the box “Yes, I want to save this W-2 form”, and again click “Continue.”
• When the return is e-filed, TaxSlayer will add together the information on the two W-2 pages.

• Returns with Code W, Health Savings Account (HSA) Employer Contribution: the Advanced Certification test now includes qualifying to do returns with HSAs.

• Employer contributions to an HSA are not federally taxable. They are reported on Form 8889, which requires additional information. After completing the entry of Form W-2 information, and clicking “Continue”, go to the Form 8889 - Health Savings Account page [Deductions > Adjustments > Health Savings Account].
• Specify whether coverage is self-only or family, and the number of months that the taxpayer was an eligible individual (eligibility requires being covered by a high-deductible health plan (HDHP)).
• If the taxpayer’s documents don’t include a Form 5498-SA, ask if they had made any contributions themselves during the tax year, other than through employer-related deductions that show on the W-2. If yes, the amount is separately entered, as discussed on page 71 below.
• If the taxpayer’s documents don’t include a Form 1099-SA, ask the taxpayer if they received any distributions from the HSA trustee. If so, see the section HSA Distribution on page 69.
• Note for CA state returns: CA does not recognize HSAs – TaxSlayer makes the adjustment, increasing state income. See Health Savings Accounts in CA, page 113, for details and other required entries.

• Box 13: Check the applicable boxes to match what is on the paper Form W-2.

• The “Retirement Plan” box determines IRA eligibility rules.
• Warning: Some employers fail to check this box when they should. If you see “G” or “EE” in box 12 of the Form W-2, then click the “Retirement Plan” box on the TaxSlayer W-2 page. 
• If the Statutory Employee box is checked, then, after “Continue” is clicked, TaxSlayer requires that the income be moved to a Schedule C. If a Schedule C hasn’t yet been set up, it can be (with basic information, only) at this point, by clicking on “Create a Schedule C”. Alternatively, “Continue with Return” can be selected, and the Schedule C can be completed later.
• The employee can report expenses on that Schedule C, offsetting the reported income.
• The income entered on the W-2 page will not be included on Line 1 of Form 1040.

• Box 14: Enter the code(s) and dollar amount(s) on the paper Form W-2.

• If there is an entry for a retirement contribution in this box (for example, “RET TS” or “401K”), this might be an elective contribution. Ask the taxpayer if this is the case. If so, select “Retirement (Not in Box 12) – Carry to Form 8880.” (See the section Schedule 3, Line 4 - Retirement Savings Contribution Credit on page 95.) But if the retirement contribution is required by the employer, then select “Retirement (Not in Box 12) – Do not carry to Form 8880.”
• Note for CA state returns: Union dues are potentially a CA itemized deduction, subject to the 2%-of-AGI reduction. TaxSlayer does not automatically handle this. On the Schedule A - Miscellaneous Deductions page, use the “ADD ADDITIONAL” box to enter this, IF it looks like CA itemizing would benefit the taxpayer.
• CA process note: In TaxSlayer, CA SDI (which sometimes appears as just “SDI” on the paper Form W-2) is entered in box 14 of the TaxSlayer page, even if it’s in boxes 19 and 20 on the paper form.
• TaxSlayer should carry the amount to line 5 of Schedule A, state taxes, as a potential income tax deduction if itemizing. 
• CA process note: California Voluntary Plan deductions (shown as VD, VPDI, or VI on the paper Form W-2) are also entered in box 14.
• Note: VD, VPDI, or VI are included in determining excess SDI contributions, but are never carried to Schedule A, because they are not taxes. 
• Note for CA state returns: The maximum amount subject to CASDI for 2023 is $153,164, for a maximum of $1,378 of SDI withholding.
• If the maximum is exceeded, TaxSlayer properly computes the allowable credit, which goes on the CA return (CA Form 540, Page 3, line 74.)
• Note: TaxSlayer does not consider VD/VPDI/VI deductions when calculating the maximum amount. As a workaround, if this TaxSlayer issue causes the incorrect amount to be placed on line 74 of CA 540, do the following: (a) on the W-2 page, change VD/VPDI/VI to “SDI”; (b) if the taxpayer is itemizing on the federal return, and box 5 of Schedule A uses state taxes paid rather than general sales tax, and the $10,000 limit on state and local taxes (SALT) has not been reached, then reduce the amount of a different type of tax paid – for example, real estate taxes – to compensate for the extra added to the box 5a amount, and (c) if another type of tax was reduced on Schedule A, then make an adjustment – positive – to the CA itemized deduction amount – see the section Itemized Deductions Treated Differently by CA on page 112.
• Boxes 15 and beyond: See the section W-2 Form - State Information on page 31. 

W-2 Form – Excludable Medicaid Waiver Payments 

• CA process note: CA’s In-Home Supportive Services (IHSS, EIN 94-2629822) pays for the in-home care of certain needy individuals and reports the payments on Form W-2. The payer name is the person being cared for (the care recipient); the payer’s address is always that of IHSS, in West Sacramento. IHSS payments are considered “Medicaid Waiver Payments” (MWP).
• Starting with Notice 2014-7, the IRS issued a set of decisions that some IHSS payments (“difficulty of care”) may be excludable from taxable income.
• The definition of difficulty of care payments is that the main home of the care provider and the home of the care recipient are the same.
• In this manual, a difficulty of care payment is referred to as “excludable Medicaid Waiver Payments”, or as “excludable MWP”. (Pub 4012 refers to such payments as “qualified Medicaid waiver payments”.)
• Taxpayers have the option of treating excludable MWP as (1) neither taxable nor earned income, (2) not taxable income, but still earned income, or (3) regular income (both taxable and earned). [In theory, a fourth option exists – taxable but not earned income, but this is never beneficial to the taxpayer and can be ignored.]
• If a taxpayer has multiple excludable MWP (that is, the taxpayer provided care in the taxpayer’s main home for two or more other people), the taxpayer must select the same option for all excludable MWP. [rare]

• However, for a MFJ return where both taxpayer and spouse have excludable MWP [also rare], different options may be chosen for the taxpayer’s and the spouse’s excludable MWP.

• Note:  Some excludable MWP are not reported on a W-2 (because no tax of any type was withheld), yet may still qualify the taxpayer for EIC. The IRS has instructed such taxpayers to treat the income as if on a W-2 (using their last pay stub) even if they didn’t receive a W-2.  See instructions in section Substitute W-2, page 24, then follow the process below.
• Note:  Excludable MWP, whether on a W-2 or not, is considered compensation for the purpose of making an IRA contribution. 
• The process for reporting excludable MWP payments is discussed on page D-12 of Pub 4012 and in a five-page NTTC document, “Medical Waiver Payments Guide”, in the shared CA-wide REFERENCES folder (tiny.cc/ca-ref) under Additional Reference Documents; that folder also has the 5-test “MWP Worksheet”.
• CA process note: Section C of that document isn’t applicable in California; IHSS doesn’t issue 1099-MISCs or 1099-NECs to care providers.
• Key concepts:
• (1) If the W-2 box 1 is zero, and the taxpayer wants to treat the MWP payment as earned income, then make box 1 in TaxSlayer equal to box 3; otherwise do not enter the W-2 (it will cause an e-file reject).
• (2) Use the Medicaid Waiver Payment (MWP) box at the bottom of the W-2 screen to remove box 1 income from being taxable on the federal return.

• The amount in this box must equal the amount in box 1, unless [this is unusual] the caregiver (taxpayer) and care recipient lived in the same household for only part of the year. 

• (3) If the amount in the MWP payment box is to be treated as earned income on the federal return, check the box just above the payment box.
• (4) If the care provider was not issued a W-2, you should construct one in TaxSlayer if the taxpayer has brought pay stub (time report) information for the year.
• Note for CA state returns: If excludable MWP income is treated as nontaxable on the federal return, then California allows that income to be treated as either earned income, or excluded from earned income calculations on the CA return. 
• This 2021 change is retroactive to all open-year CA returns – that is, 4 prior-year tax returns.
• If the excludable MWP is treated as taxable on the federal return, it must be treated as earned income on the CA return.
• The amount in box 16 of a W-2 (except wages in another state) is primarily what the CA return uses to calculate CA earned income. This amount in TaxSlayer flows to line 13 of FTB Form 3514. 
• The critical issue for excludable MWP payments on the federal return is to test all three options to determine which benefits the taxpayer the most. (Remember that EIC rises as earned income increases, then plateaus, and then decreases, ending at zero.) Don’t do this testing until, at minimum, all other income and income adjustments have been entered in TaxSlayer.
• CA process note: You must test five options, not three, to determine what’s best for the taxpayer overall. Those five are (numbering follows the NTTC document cited above):

• (1a) Not taxable on the federal return, not earned income on the federal return, not earned income on the CA return
• (1b) Not taxable on the federal return, not earned income on the federal return, earned income on the CA return
• (2a) Not taxable on the federal return, earned income on the federal return, not earned income on the CA return
• (2b) Not taxable on the federal return, earned income on the federal return, earned income on the CA return
• (3) Taxable on the federal return, earned income on the federal return, earned income on the CA return
• CA process note: For purposes of testing, use box 16 on the W-2. If you set the amount to equal box 1, TaxSlayer then puts the amount onto line 13 of FTB Form 3514, making it earned income on the CA return. If you set it to zero, then the amount paid to the taxpayer is not treated as earned income on the CA return. 
• CA process note: Once you have decided what the best option is, you must set box 16 to equal box 1. Then you may need to go into the CA return and enter information in FTB Form 3514.
• You don’t need to do this if you’ve chosen option (1b), (2b) or (3), where wages are treated as earned income on Form 3514.
• Otherwise – option (1a) or (2a), where wages are not included as earned income on Form 3514, go to the CA state section, select “Credits”, then “CA Earned Income Credit and Foster Youth Credit (Form 3514)”, and enter the amount of the MWP payment(s) in the second dollar amount field. When a taxpayer has excludable MWP, there should always be a note in the return (see page 8) saying what was done on the return.

• [Workaround] If after completing the return, either the AGI amount, on Form 1040 Line 11, is zero (the taxpayer had no income other than excludable MWP), or if there is a positive amount on Line 11 but taxes withheld (Line 25d) is greater than Line 11, another adjustment is required in order to e-file.
• Go to the Dividend Income (Form 1099-DIV) page [Income > Form 1099-INT / 1099-DIV > Interest or Dividend Income > …]; enter “IN ORDER TO E-FILE” as the Payer’s Name, and enter $1 on the line for “Capital Gain to Schedule D (Box 2a)”. 
• [Workaround] One final adjustment may be needed on the federal return. If the taxpayer has qualifying expenses that can be used for the Child and Dependent Care (CDC) credit [Line 2 of Schedule 3], then the expense amounts, listed on the F2441 - Child Care Credit - Page 1 page, may need to be reduced. The total of those expenses cannot exceed the total of (a) income on other W-2s (those which are not excludable MWP) plus net business income reported on Schedule 1 Line 3, plus any taxable income on W-2s for excludable MWP.
• Note for CA state returns: The nonrefundable dependent-care credit on CA Form 3506 will automatically be correct if any needed adjustment is made to the expense amounts on the federal Form 2441.
• Final steps for current-year returns: Make one or more notes in TaxSlayer, and on page 2 of the Intake Booklet, that (1) the taxpayer had excludable Medicaid Waiver Payment; (2) whether that was treated as earned income or not on either the federal or state return, or both; and (3) any workarounds you did to handle this. 
• It is also highly recommended that each site have a “Medicaid Waiver” (or similar) return tag that can be assigned to returns involving potentially excludable MWP, in addition to the regular tag(s). That makes it easy to find all taxpayers with this type of income, as well as to identify taxpayers for whom a prior year amendment might be desirable.
• Amending 2020 through 2022 federal returns
• Note that the statute of limitations for amending (most) federal 2020 returns to claim a refund is May 17, 2024. Try to accommodate affected taxpayers as much as possible.

W-2 Form - Indian Tribal Income

• Tribe members often work on tribal land – for example, at a casino, and receive a Form W-2 for that work
• Tribal income is always taxable on the federal return.
• Note for CA state returns: Indian tribal income is exempt from CA taxes ONLY WHEN the recipient is (a) an enrolled member of a federally-recognized Indian tribe; (b) living on any tribal land in California; and (c) the income was earned or derived from any California tribe’s land.

• For income meeting all three criteria, which is therefore exempt from CA taxes, reduce CA income as described in the section Manually Entering Income Differences on CA Schedule CA on page 108.
• Note: If there is any question to the definition of “living on” tribal land, see FTB Legal Ruling 2015-01.

W-2 Form - Tip Income

• Employers can report tips on Form W2 in one of three ways:

1. Include tips reported by employees (“reported tips”) in the taxable wages amount, in box 1 of Form W-2 
2. Put tips reported by employees into box 7 (“Social Security tips”), which, when added to box 3, should equal box 1, Wages 
3. Report “allocated tips” in box 8. This amount is calculated by the employer, based on sales or pooled tips or information other than the tips reported as received by the employee.

• If the taxpayer has maintained a tip log and advises that the total tips are less than the allocated tip amount, the taxpayer's tip amount should be used in box 8; if the actual tips are greater than the allocated tips, use the unreported tips field described in the following paragraph to increase the allocated amount to the taxpayer's actual amount. 

• There may be unreported tips.
• Unreported tips can occur because:

• The employer did not report any tips in boxes 1, 7, or 8.
• The tip amount reported by the employer on the W-2 understated the amount actually received by the taxpayer.
• There is a box on TaxSlayer’s W-2 page for unreported tips - below box 10. 
• When an amount is entered in this box, TaxSlayer automatically adds Form 4137 to the tax return, and computes the Social Security and Medicare tax due (Line 5 of Schedule 2).
• If the taxpayer has detailed records of tips received, and there are one or more months when the tips received (including those paid to the employee by the employer, either directly or as part of the employee’s paycheck), were less than $20 for that month, then total the amounts for such months, and enter the amount in the first box of the Form 4137 Social Security and Medicare Tax on Unreported Tip Income page [Federal  Section > Other Taxes > Tax on Unreported Tip Income].
• Unreported tip income from Form 4137 flows to Form 1040 Line 1c.

W-2 Form - State Information

• Note for CA state returns: WARNING – If you’re entering information from an IRS transcript, there will be no state information. You must set the state to “CA” (assuming that income was earned in California) if you want the California state tax return to be correct, particularly the California EITC amount.
• Box 15: Enter the State ID number without dashes or spaces.

• The State ID number is NOT the same as the federal ID number; CA IDs are almost always eight digits.
• The State ID number is required, whether or not state tax was withheld.
• Note for CA state returns: If the State ID number is blank on the paper W-2, or an IRS transcript is being used for W-2 information, enter six nines (999999) in TaxSlayer. . Similarly, if the State ID number on a paper W-2 is incorrect (either fewer or more than eight digits, ignoring leading and trailing zeros), enter “999999.”
• Note for CA state returns: Form W-2s issued by California In-Home Supportive Services (IHSS) in West Sacramento (EIN 94-2629822) will show the name of the person being cared for (often a relative) as the employer. A unique CA tax ID is assigned to that person, as the employer; for such W-2s; if the State ID number is automatically filled by TaxSlayer, it is almost definitely wrong and should be manually changed.
• Box 16: As entered in TaxSlayer, this must equal the amount of wages that ends up being taxable by CA, whether via the Federal AGI (through the amount in box 1 of the W-2) or indirectly (through a CA Schedule CA adjustment related to that W-2). The only exception is discussed in the section W-2 Form – Excludable Medicaid Waiver Payments on page 28.

• Normally box 16 equals box 1, and that’s the default – TaxSlayer fills in box 16 with the amount in box 1. But that can be wrong. The most common exception is HSA contributions (Box 12, code W), which are taxable by CA (TaxSlayer handles the taxability automatically). For a W-2 with employer HSA contributions, box 16 should equal box 1 plus the amount for code W in box 12. (The paper W-2 may already reflect this, but if it doesn’t, ignore what’s on the paper W-2.)
• CA process note: Box 19 (Local Tax Paid)/box 20 (Local Name): If the paper Form W-2 has entries for CASDI, SDI, VPDI, VP, or VI in these boxes, enter them in box 14 in TaxSlayer, not boxes 19 and 20 (see above).

W-2 Form for a Student 

• If a Form W-2 was received for a student (usually for pay as a Teaching Assistant), the entire amount is taxable and cannot be reduced by student-related expenses.

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