W2 non qualified plan pension income reported differently in 2022 versus 2021 on my 1040

[Builder]

My 2022 W2 reports Box 1 income with the same income number in box 11 nonqualified plans.   The W2 was the same in 2021.   The 2022 income is reported on Schedule 1 Line 8t and Line 8 on the 1040.   The same income for 2021 was reported on line 1 on the 1040.   Did a rule change in 2022 that moved nonqualified plans on a W2 from line 1 to line 8 i the 1040 for 2022?

[MarilynG1 · Accepted solution]

The, the IRS did change reporting requirements for 2022.

It is being correctly reported on Schedule 1, Line 8t and Form 1040, Line 8.

Here's more info on Non-Qualified Pension Reporting. 

[Builder]

Many thanks for the quick reply.    As a follow up, if the W2 shows income in Box 1 but, the 1040 shows zero on Line 1, will the electronic fed filing get rejected due to the significant disparity.    It looks weird !!   Haven't tried filing yet but, other posters seem to suggest that it will get rejected.

[JohnW152]

It does look weird, but the e-file system won't reject your return on the basis of this.

This is a change in reporting required by the IRS for tax year 2022.

Pension or annuity income from a nonqualified deferred compensation plan or nongovernmental section 457 plan is now reported on Schedule 1, line 8t.

When a taxpayer receives a pension or annuity from one of these plans, and it's been reported in box 1 of Form W-2, the amount should no longer be included on line 1a of Form 1040. 

[Builder]

Thank you for your quick response.     I feel much better about this issue.    I always to the YOY review and this one popped out immediately so I needed to find an explanation/reason given the size of the differing numbers.

[Brenda1956]

I see in the IRS instructions for Form 1040 that nonqualified deferred compensation pension and annuity income is to be reported on Schedule 1, line 8t. I have two W-2 forms with such income, and I entered them both into TurboTax as separate W-2s. One has a certain (same) amount in both Box 1 and Box 11 (Nonqualified plans). The other is from a different payer and has a larger (same) amount in both Box 1 and Box 11. However, for some reason TurboTax is reporting the income from the first W-2 on Schedule 1, line 8t, while the income from the second W-2 is being reported on Form 1040 line 1a. Is this a bug in TurboTax? What should I do?

[LindaS5247]

You are stating that both W-2's are coded exactly the same, but they just have different amounts and they are from different payers?

Nonqualified deferred pension and annuity income should be reported on Schedule 1 as "Other Income" on line 8t, and flow through to your Form 1040 onto line 8.

You can try deleting and reentering your Forms W-2.  This may fix the issue.  Also, after you delete them clear your cache and cookies.  Go out of the program and go back in and add the Forms W-2 again.

Both line 1a and Line 8 of Form 1040, are taxed the same so it will not have any affect on your refund/amount due. As long as you have entered your Forms W-2 exactly as they are shown, you should have no issues.  Keep all of your documents with your 2022 tax return information.

If this does not help please feel free to come back to TurboTax Community additional details or questions or click here for information on Turbo Tax Support.  You can connect with a Live TurboTax Agent and share your screen.

[prabhudevprasad]

Hello, Reporting of non qualified 457b distribution continues to be a problem.  Fidelity issues me a W2 for the 457b distributions each year. They include this amount in Box1 (wages and tips), Box 11(Non qualified plans) and Box 16(state wages).  When I put in all this information in TurboTax as a second W2, it doubled the amount in Line 8 of 1040 and also in Schedule X of Massachusetts return. This is obviously increasing the taxable amount. I tried deleting the Box 1 amount and including only Box11, but it did the same thing.  Please let me know how to correct this. Is TurboTax working on any fix for this ?  Thanks

[LeticiaF1]

If you are still getting an error, it would be helpful to have a TurboTax ".tax2023" file that is experiencing this issue.

You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions: Go to the black panel on the left side of your program and select Tax Tools.

• Then select Tools below Tax Tools.
• A window will pop up which says Tools Center.
• On this screen, select Share my file with Agent.
• You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number.
• Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.

Here are the instructions if you are using TurboTax CD/Download:

• Click on Online in the top left menu of TurboTax CD/Download for Windows
• Select 'Send Tax File to Agent'
• Write down or send an image of your token number then place in this issue.
• We can then review your exact scenario for a solution.
• Please also tell us any states included in the return.

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution. 

@prabhudevprasad 

[Websearcher]

I was hoping you'd be able to help me with a question on this W-2 for a 457(b) distribution.  The income is being reported as you mentioned on line 8T Additional Income.  My problem is, turbotax is NOT recognizing the "federal income tax withheld" on line 2.  I don't see it anywhere in the Payments section line 25 to 32.  Why is that?  Someone from the community suggested I enter this W-2 as a 1099-R but then I don't know how to answer - "Select a code that matches Box 7 on your 1099-R", since what I got is a W-2 and not a 1099-R.  Thanks!

[DawnC]

You are saying the amount from Box 2 of your w-2 is not included in your withholdings on your tax return - - and you are sure you entered it?   @Websearcher   If you entered an amount in Box 2 from your w-2, it will show up on Form 1040, Line 25a and be included on Lines 25d (total of 25a-c) and 33.   Preview Form 1040

[Websearcher]

Thank you for getting back to me.  Yes.  Definitely sure I entered Box 2 Fed. Income Tax Withheld.  I rechecked the form.  I also deleted it and re-entered the W2 and same result.  It only took the withholding from my main job's W2.  (So yes, I have 2 W-2's for this return).   

OK - I don't know if this has any bearing but when I entered the W-2 from this problematic one, there was a next question of:  "Did you take money out of your nonqualified pension plan?"  I thought this was an odd question because wouldn't the answer have to be "Yes, I took this money out of my nonqualified pension plan or section 457 plan" by the mere fact that I have a W-2???  Background information:  My previous employer terminated the 457(b) plan in 2023 and I was thus forced to take the money out.  OR should my answer have been "No, this is money I contributed to my nonqualified or Section 457 plan"?  I mean I did contribute this money years ago when I was employed there and was allowed to keep it in my previous employer's plan when I left.  So technically, the answer is both the Yes and No options but you're only allowed to pick one so I picked the Yes.  And if you answer yes, it wants to know which state so I picked CT since this W-2 box 15 did say CT/with theEmployer state ID and box 16 for State wages, tips, etc. showed the same amount as in box 1.  Box 17 for State income tax was $0.  Hope I haven't confused you with all these details but I'm trying to give you the complete picture.  Thank you very much for your time.  I really appreciate it.

[prabhudevprasad]

Hello Websearcher,    

I didn't have any federal tax withheld on my 457b distribution, so this was not an issue for me. Sorry, I am not able to help you with this. 

Did you take money out of your nonqualified pension plan?" - For this question I also answered "YES' and picked the state in the follow-up question. 

Best wishes

[Websearcher]

Thanks for trying to help.  Still appreciate the effort @prabhudevprasad.  Not sure what to do yet but have to figure this out as it's a lot of withholding taken out...

[AmyC]

If the problem you are having is the withholding, how about something unconventional?

Don't put the withholding on the form, move it to another section. 

1. Go to deductions and credits. 
2. Select Other Income Taxes.
3. Select Withholding not already entered, start/ edit
4. Answer yes
5. Enter the amount in federal
6. Continue

@Websearcher