NY State Tax Audit

[Thatguy119]

I received a letter stating I failed to report correct
amount of retirement contributions (414h) or
payments to a flexible benefits program (IRC 125)
on your return.
Upon checking box 21: Public employee 414(h)
retirement contributions from your wage and tax
statements, I entered the correct amount that was
stated I was missing.
I already paid the state the money they claimed I
owed, can I still file a claim or take action?

[Mike9241]

the issue is why the state says you did not claim it while you say you did.  did you carefully check over the state return that was filed to make sure it was reported.  if it  was then it's up to you whether to protest your self or use a service offered through Turbotax or even hire an outside pro

The Audit Defense service is provided by TaxResources, Inc., also called TaxAudit.com, in partnership with TurboTax. If you paid for Audit Defense and you received an IRS notice, call TaxResources, Inc. at 877-829-9695, or report your notice on their website at http://intuit.taxaudit.com/. Do not contact the tax authorities until you have spoken to TaxResources. They may contact the tax authorities on your behalf.

[FangxiaL]

Check to see if the NYS notice is referring to a different tax year. Sometimes they don't catch the error right after you filed your tax return.

The same issue happened to many NY public employees.

@Thatguy119

[Thatguy119]

A lot of public workers, did they not file correctly or was it a mistake?

The audit is for the 2019 tax year. 

[Thatguy119]

when I field my taxes I selected the “Other” category from the drop down box from box 14 as it was listed on my W2. Should I have selected New York IRC 414 (h) Subject to NY tax or New York IRC 414(h) NY tax exempt?

[LenaH]

It depends. Please check the list below and determine the source of your retirement contributions. If you are a member of one of those groups and that is the source of your retirement contributions, then you should have selected Subject to NY Tax.  Otherwise, you should have selected Tax Exempt.  

The following 414(h) retirement contributions shown on federal form W-2, Wage and Tax Statement, are taxable by New York State.

• A member of the New York State and Local Retirement systems, which include the New York State Employees' Retirement System and the New York State Police and Fire Retirement System.
• A member of the New York State Teachers' Retirement System.
• An employee of the State or City University of New York who belongs to the Optional Retirement Program.
• A member of the New York City Employees' Retirement System, the New York City Teachers' Retirement System, the New York City Board of Education Retirement System, the New York City Police Pension Fund, or the New York City Fire Department Pension Fund.
• A member of the Manhattan and Bronx Surface Transit Operating Authority (MABSTOA).

@Thatguy119

[Thatguy119]

I fall into one of the categories from the provided list. I find it confusing since box 14 on my W-2 is listed as “Other”. Do I still select NY IRC 414H Subject to NY Tax even if my W2 has my IRC 414h contribution in box 14 as “Other”?

[FangxiaL]

Yes, you still need to select NY IRC 414H Subject to NY Tax regardless of what is shown in Box 14 on your W-2. If you work for NYS or NYC, it is taxable income on your NYS return as an add back. When you retire and take the pension, it is tax-free, that's why we are paying tax to NYS now.

@Thatguy119