do I need to enter form 593 for my California tax returns if I qualify for exemption (checked one box in part III)?

Forum|Forum|1 year ago
February 17, 2025
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I sold my primary residence in 2024, and I filled out Form 593 for the sale (checking a box in part III). There was no withholding made, but do I need to file Form 593 with my California tax returns? When trying by to enter it into TurboTax, I am prompted to fill out part VII (withholding calculation, amount withheld, etc.) and cannot proceed without. However I don’t have this info as the escrow agent did not do any withholding. If there was no withholding, then I don’t need to enter the 593 in my tax returns? I have already entered the 1099-S in the Federal section.

MonikaK1

You don't need to enter Form 593 in your tax return at this point. However, form is available in TurboTax, and if you are using the Desktop version, can easily be added.

The Form 593 should have been sent to the Franchise Tax Board by shortly after the escrow closed, but the responsibility for submitting the form lies with the remitter of the withholding or someone handling the escrow and is not a form you would normally include with your tax return. It's possible that the form was among the package of closing documents for your escrow.

From the FTB 2024 Instructions for Form 593:

A seller/transferor that qualifies for a full, partial, or no withholding exemption must file Form 593. Any remitter (individual, business entity, trust, estate, or REEP) who withheld on the sale/transfer of California real property must file Form 593 to report the amount withheld.

If the seller/transferor is exempt from withholding, this form must be sent to the real estate escrow person or QI prior to the close of the real estate transaction. The form must be sent to the FTB by the 20th day of the calendar month following the month in which escrow closes.

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optca50

I'm not clear from your response if we need to file form 593 or not? I am exempt from withholding due to marking #1 in part III. At the beginning you stated "You don't need to enter Form 593 in your tax return at this point...". Then later in bold wrote "A seller/transferor that qualifies for a full, partial, or no withholding exemption must file Form 593".

Am I correct that if I have already signed Form 593 and given it to escrow they will take care of filing it and I do NOT need to include it in the tax return?

MonikaK1

The Form 593 should have been sent to the Franchise Tax Board by shortly after the escrow closed, but the responsibility for submitting the form lies with the remitter of the withholding or someone handling the escrow and you don't need to file it with your return. It's possible that the form was among the package of closing documents for your escrow.

Since you had no withholding, you don't need to make an entry on Line 73 of Form 540.

@optca50

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