topic Re: Vacation pay in Get your taxes done using TurboTax

Vacation pay

bob667 — Wed, 11 Feb 2026 06:05:26 GMT

2 part question: I retired 2022 December

therefore did not work 2023. I received money for accumulated vacation backpay

in early 2023 and accompanying W2 form. Do I enter as normal income or some other option available that might be lower tax rate? And although I did not work my MAGI is over $135k for some reason therefore unable to take advantage of contributing IRA as tax deduction. Why my magi so high when I did not work?

Re: Vacation pay

Bsch4477 — Thu, 14 Mar 2024 01:34:03 GMT

Enter the W-2 as you would normally. We can’t see your return but you must have income to account for your MAGI.

Re: Vacation pay

DavidD66 — Thu, 14 Mar 2024 01:34:15 GMT

You report your W-2 for the vacation back pay the same way you would report a W-2 received while you were still working. The vacation pay is considered earned income just like your earnings while you were working. There is no lower tax rate option. If the amount in box 1 of your W-2 plus investment income and retirement income (taxable social security, pensions, etc.) is over $135,000 then your MAGI would be that high. Even though you did not work, you still have earned income from the vacation pay.

Re: Vacation pay

bob667 — Mon, 18 Mar 2024 07:50:32 GMT

Vacation pay I collected in 2023 about $14k. No dollar from work as I was retired entire 2023. Yet my My magi is well over $150k which is amount I never earned that high in my life. Where do I get the calculation and the breakdown in TT?

Re: Vacation pay

Vanessa A — Mon, 18 Mar 2024 14:29:44 GMT

Sounds like there may be a typo. Go back and double check your decimal points any forms you entered, especially the W-2 with the $14k. Be sure you didn't enter that as $140K instead of $14k.

If you are using TurboTax desktop you can also go to forms mode, then click on your 1040 form, then right click and select data source. This will tell you where the numbers are coming from.

If you are using the online version, you can see your 1040 form, but you can not data source the information.

On the menu bar on the left that shows.

Select Tax Tools
On the drop-down select Tools
On the pop-up menu
Select View Tax Summary
On the left sidebar, select Preview my 1040

Re: Vacation pay

bob667 — Tue, 19 Mar 2024 02:33:38 GMT

It’s taking both my wife and myself combined income as the magi. Should it not be just for my wife since she wants to contribute?

Re: Vacation pay

DawnC — Tue, 19 Mar 2024 03:12:35 GMT

Not if you are filing a joint tax return. Your traditional IRA contributions may be tax-deductible. The deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels.

IRA deduction limits

Re: Vacation pay

bob667 — Tue, 19 Mar 2024 22:38:36 GMT

Could it be turbo thinks she is still employed since she got w2 vacation back pay in Jan 2023? It thinks she is still contributing to her work retirement? We both don’t contribute to work retirement plan. She worked zero hours 2023. Even if magi is both her and me we are still under $218k which should allow her to contribute?

Re: Vacation pay

DianeW777 — Tue, 19 Mar 2024 23:02:35 GMT

Yes, the earnings on the W-2 do allow a contribution for her, it's just the deduction that could be limited. It is considered earnings in 2023 based solely on the W-2. Check out the IRS information page below. TurboTax will walk you through any allowable deduction.

IRA Contribution Deduction Limits (if in a retirement plan at work as indicated by Box 13 of your W-2)

@bob667

Re: Vacation pay

bob667 — Thu, 21 Mar 2024 21:40:51 GMT

I think turbo miscalcuting as it specifically says my wife magi is over the limit. If both her and me combined then yes we over the limit. Her magi is double what she usually makes.

Re: Vacation pay

bob667 — Thu, 21 Mar 2024 21:42:22 GMT

And she is retired. Worked 0 hours in 2023. Only got $10k for vacation back pay in Jan 1023.

Re: Vacation pay

MarilynG1 — Fri, 22 Mar 2024 02:44:31 GMT

Since we can't see your return or W-2's in this forum, I would suggest that you Delete and Re-Enter your W-2's very carefully.

A W-2 is reporting income, like wages, even if you're actually retired. It all counts the same.

Here's How to Manually Enter a W-2.