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10972: States Generally - e-Filing


State Returns Generally

What state returns can I e-file? How are the state files sent via e-file? How many states can be e-filed?

 

Current state e-file approval statuses are available online at Drake Support on the Federal/State Facts Page:

  • Go to the Drake Support Website and login using your user account credentials.
  • Navigate to Support > Documents > Federal/State Facts.
  • Select a state from the Current Year drop list under States.
  • Select E-file Packages Available.

There are several types of state e-filing: linked-only, linked, unlinked, and direct. Drake Tax uses the applicable transmission type automatically, however, you may want to know how the different types function when readying your returns for filing.

Normally, when the preparer e-files a Federal and a State return at the same time in Drake Tax, it is sent linked. This means the state e-file will wait until the federal return is accepted before being sent along to the state tax agency.  If the federal return is rejected, then the state return will automatically be rejected back to the preparer.

If the state return is e-filed after the federal return was previously accepted, Drake Tax will also link the federal return to the state return.  The linked state return will be e-filed to the IRS and the IRS will send along the e-file to the state tax agency.

For states that permit it, if the preparer e-files a state by itself without e-filing the federal return – for whatever reason – the state e-file will be sent unlinked. This means that whether or not the federal return is ever e-filed or rejected, the state e-file is sent to the IRS then then from the IRS to the state tax agency.  The state tax agency will then either accept or reject the e-file and send the acknowledgement back to the preparer.

Linked-Only States

A few states only allow the state to be filed as a linked return. Below are the states that ONLY allow linked e-files. You will not be able to e-file these states without e-filing the federal return either before or at the same time as the state e-file. If federal rejects the filing, the state will reject due to no-fed acceptance (see Related Links below). A red message page on the federal return will also prevent e-filing of the state return if it is linked-only.

  • Alabama
  • Arizona
  • Arkansas
  • Kansas
  • Mississippi
  • Oklahoma

Linked States

Most states allow both linked and unlinked e-file submissions. Linked states should be transmitted with the Federal return, but can be transmitted separately after the federal has been e-filed and accepted.

  • Linked states do not accept returns until the IRS accepts returns. There are no linked state acknowledgements until then.
  • After Drake starts transmitting Federal and linked state returns, a linked state return is rejected if the Federal return is either rejected or not acknowledged within a reasonable period of time after transmission (see Related Links below).
  • If it is necessary to transmit a linked state separately, you should wait until the Federal return has been accepted. If the Federal return is rejected, and you must correct it, the state return may be affected because Federal information flows to the state return. By waiting, you avoid the possibility of having to file an amended state return.

Unlinked State e-Filing

By contrast, a state submission which is NOT linked to a federal submission is called an unlinked e-file. When transmitted, the state e-file is sent to the IRS. The IRS does some basic validity checks on the state e-file and then sends it on to the state taxing agency regardless of whether a federal e-file has been accepted at the IRS.

Direct States

There are some rare states that, when transmitted, do not go to the IRS; they have designed and built their own e-file systems separate from the IRS altogether.  Examples of this are California and Texas.  For example, when a California e-file is transmitted, it goes directly to California, bypassing the IRS altogether. California does all its own validity checks and processing from end-to-end. 

It is common to confuse an unlinked e-file with a Direct e-file, however, they are not quite the same. Most states can be linked or unlinked, but California and Texas are only always Direct e-files to the state system.

Generally, the best practice is to transmit a direct state return after the Federal return is accepted. If the Federal return is later rejected, modified, or otherwise re-transmitted and approved, any modifications that affect an accepted state return may require you to amend the state return.

Number of States allowed for EF

Beginning with Drake14, you can file 47 states with each 1040 or business return.

Drake will attempt to send all states with the federal when you e-file. To e-file something less than all states on the return, go to the EF screen within the program and select all items you want to e-file.

If the transmission is larger than your internet speed can handle, such as if you are filing a large return with multiple states and PDF attachments, you may need to split up your transmission. If the size of the transmission is too large, the session may time out and result in an unsent batch on EF > Transmit/Receive.

See Related Links below for additional troubleshooting steps. 

Before IRS Opens 

Returns transmitted before IRS begins taking them are held by Drake until IRS will take them. There are no federal acknowledgements before that time.

  • States for which Drake has e-filing approval can be transmitted.
  • States for which Drake does not yet have e-filing approval cannot be transmitted until Drake receives approval. Once approval is received, updates are released to enable the e-filing of those returns.

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