457b NJ question

Forum|Forum|5 years ago
January 26, 2021
1 reply
7 views

I left my employer and elected to take my non government 457b over 3 yearly distributions. The first occurred last year. New Jersey taxes were paid on the contributions ( I believe). I received a W2 (not 1099R) for the first distribution taken last year. Turbo tax wants to add the total W2 amount to my income. Using the General rule, I can calculate my taxable portion vs my excluded portion for NJ tax. How do I a report my income in Turbo tax as the program defaults to adding the complete W2 listed amount to my income?

DianeW777

Level 15

Yes, that is correct. You did pay tax on the contributions on the New Jersey return. You should use the General Rule worksheet to enter the correct taxable amount in the State section on the W-2. Then the taxable amount will carry correctly to the New Jersey return.

I advertently state 1099R in your other post, it should have said W-2.

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gcburkeAuthor

Level 2

Thanks that works in the TurboTax program. If I file electronically, should I be prepared for a state audit as won't this create a W2 mismatch as what is reported on the NJ-1040 will not match the totals of the W2s that NJ receives? Is it better to file by paper with supporting documents even if it takes three times as long to receive an refund or should I just file electronically and wait and see? If I buy the audit protection, is this something TurboTax would handle as a third party?

WendyN2

Level 9

No, you would not be better off in mailing your returns. So, YES, you should definitely file electronically. You should always save your tax documents for at least 7 years in case of an audit. What will most likely happen is that you would receive in the mail a letter from the State Division of Taxation, stating that they noticed a discrepancy in the information provided by you. This could take anywhere from 3 months to 5 years but typically much sooner than later. State confirmations are far less labor intensive than IRS issues of the same type as this. It will all work itself out.