Should I enter two W-2 forms for one non-qualified retirement distribution separately or combine them? They have different W-2 boxes filled out.

[dmertz]

Please elaborate.  If one Form W-2 has the CORRECTED box marked indicating that this form supersedes the original, only the corrected form should be entered.  Otherwise, it doesn't make sense that the same distribution would be reported (presumably in boxes 1 and 11) on two different Forms W-2.  If there were deferrals to, vesting of and distributions from the non-qualified deferred compensation plan in the same year, there are some complicated rules for reporting these on a Form W-2, but these are generally not reported on separate Forms W-2.

[M298]

Thanks for your reply. Neither is a corrected form. The one from the retirement plan administrator (ie a financial institution) has boxes 1, 2, 11, 16 and 17 filled out. The other, from the employer, has boxes, 3, 4, 5 and 6 filled out. The plan administrator rep said that the employer often reports the FICA taxes separately; she said to ask Turbo Tax. Of course there are different addresses and employer state ID numbers, which would make it difficult to combine and report as one W-2. Any thoughts?

[dmertz]

Yes, it appears that the W-2 with no amount in boxes 1 or 11 is reporting the vesting of prior year deferrals or employer matching funds separately from the other W-2 reporting the taxable distribution. The W-2 with nothing in box box 1 will only affect your tax return if you have had Social Security tax withheld by another employer and the total exceeds the Social Security Wage base.  Otherwise, it has nothing that is reportable on your tax return, only information used by the Social Security Administration and Medicare.  You can confirm that it doesn't affect your tax return by entering it and seeing that no amount appears on Schedule 3 line 11 as excess Social Security tax withheld.  Note, however, that TurboTax will not allow e-filing a tax return from a tax file that includes a W-2 with nothing in box 1, so it might make sense to omit this W-2 to be able to e-file if doing so does not affect your tax return.

I have no idea how the Social Security Administration treats a W-2 that has amounts in boxes 3 and 5 but nothing in box 1 or how they would be able to correlate it with the reporting on the other W-2.

Did the payer actually withhold the amounts in boxes 4 and 6?  If not, how did these amounts get paid?

[M298]

Hi, yes, all of the amounts in 2, 4, 6, and 17 (i.e. federal, state and FICA taxes) were withheld from the lump-sum payment made to me in 2019.  It seems that the employer (not my current one) decided to report the FICA taxes withheld while the plan administrator reported the federal and state taxes that were withheld.  It probably would be easier to not include the employer W-2 (with FICA withholdings).  However, I have already reached my limit on SS tax withholdings with my current employer. Therefore, my taxes would be reduced by the excess taxes paid to SS. 

I entered both W-2 forms and did not receive an error when I ran the federal review.  However, if TurboTax will not allow efiling if one W-2 does not include box 1, that would be a real problem.  It would argue to take the FICA taxes from one W-2 and just combine it with information from the other W-2 but not sure if that would also be problematic.    

[dmertz]

If TurboTax prevents e-filing with a zero of blank box 1, you might consider entering both Forms W-2 and moving $1 from box 1 of one to box 1 of the other rather than just combining everything on one form.

[M298]

Thanks for the suggestion! Will definitely try it this way.