Amazingly, this is still not corrected, as of March 2, 2024.
I spent 4-5 hours documenting this problem for Turbotax and on the phone with them.
I received a "case resolved" email - but it's not, and there's no work-around.
This has to be impacting a lot of NY taxpayers - it's not an uncommon situation, and NY tax law is clear, as stated below.
$20,000 Pension and Annuity Exclusion at https://www.tax.ny.gov/pdf/volunteer/ty2018/co-60.pdf
Q: If a retired executive receives periodic payments from a deferred compensation plan that isn’t
considered a qualified pension plan under the IRC, and the payments were considered wages under
IRC 3121(v), do these payments qualify for the $20,000 pension and annuity income exclusion
under Tax Law section 612(c)(3-a)?
A: Yes. The IRS determined that payments received from the nonqualified plan were wages for federal
income tax purposes and were reported on a Form W-2 (only the amount in Box 11 – Nonqualified
plans – is eligible for the exclusion). However, it was ruled that the nature of the payment is intended
to be pension or annuity, which qualifies for the subtraction modification when certain criteria are met.
