I receive a W-2 from a former employer for yearly payments from a non-qualified deferred comp plan. It's really a pension, rather than wages, but they must issue a W-2. Based upon the following from a NYS Taxation Forum, I believe that I'm eligible for the 20k pension exclusion:
New York State Department of Taxation & Finance
Common questions and answers about pension subtraction adjustments
Nonqualified Pensions and Annuities
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
Unfortunately, Turbo Tax doesn't seem to be able to have W-2 income be eligible for the NYS pension exclusion. When I did an override, I was unable to e-file (which NYS requires). This is clearly a software issue, any suggestions as to how to proceed? Thanks
