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February 10, 2025
Question

Can I fix the credit carryover and recapture summary that triggers form 3540 and 3554 as it does not apply to me?

  • February 10, 2025
  • 1 reply
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My Ca state return is getting flagged for 3 errors that have to do with Credit carryover and recapture, forms 3540 and 3554. This situation doesn't apply to me but I cannot figure out how to fix it.

    1 reply

    February 18, 2025

    Form FTB 3554, New Employment Credit (NEC) is available for each taxable year beginning on or after January 1, 2014, and before January 1, 2026. If that form doesn't apply to you, what may have happened is that when you got to the portion of your CA state return that says " Credits and Taxes" that an entry was made in New Employment Credit or Recapture. Clicking start on this portion brings you to a screen where there is a box where there may have been a figure inserted, even a "0". if you did not need this credit, putting a figure in that box automatically populates that form causing it to now give you errors on the State Return review. 

     

    If you tried deleting the form and that didn't work, or going back to the box and remove the "0", the only thing that will work is deleting your CA State return and starting over, this time without going into the "New Employment Credit Recapture" if you do not need to fill out form 3554.

     

    If your issue involves Form 3540, revisit the Credits and Taxes section. Again, if you made an entry there, even a "0", try deleting the "0" or other data entered, or deleting the form that entering data in that section created. 

     

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