How to resolve Diagnostic 55150 in Lacerte

If you're receiving the following diagnostic:

Diagnostic 55150:

Certain medical reimbursement exclusions (under section 3702 of the CARES Act) are not recognized in Indiana, and therefore should be excluded from Indiana gross income. Use the Current Year Conformity add-back field in the Indiana Modifications screen to make an entry.

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This diagnostic appears when a taxpayer has excluded certain medical reimbursements from federal income under the CARES Act (Section 3702), but Indiana does not conform to this exclusion.

As a result, those reimbursements must be added back to Indiana income using a specific state adjustment.

Note: While this is a critical diagnostic, it does not prevent e-filing. However, Indiana taxable income will be incorrect unless the add-back is entered.

Follow these steps to resolve:

1. Go to Screen 51.111 – Indiana Modifications
2. Scroll to the section Indiana Income Adjustment
3. In the Add-back Code dropdown, choose one of the following (as appropriate):
   • 244: Medical Reimbursement (CARES Act) exclusion add-back
   • 254 or 255: Other applicable federal conformity adjustments
4. In the adjacent Add-back dropdown, select Current year conformity add back (120/147) (Override)
5. Enter the amount of the medical reimbursement (or other federal exclusion) that must be added back to Indiana income
6. Recalculate the return (Ctrl + R)
7. Confirm that Diagnostic 55150 is cleared, or that it’s noted for documentation purposes

Once complete, the return will reflect Indiana’s treatment of the income and remain eligible for electronic filing.