Non qualified deferred compensation plan

[jvmiller513]

I m retired, part-time NY state resident with a non-qualified deferred compensation plan from my original employer. The proceeds are reported on a W2 in box 1 and box 11.  On my NY State return, it looks like Turbo tax is correctly reporting this income on form IT-203 form, line 16 (line 1 is zero) but everytime I try to electronically file my NY state return, it gets rejected by NY state because "NYS Wages should not be equal to zero when W2 shows NY wages." Fed return was electronically filed with no issues. Does anyone know how to fix this problem? Did I miss a box to check somewhere?

[AmyC · Accepted solution]

Wages can't equal zero. Check this:

1. W2
   1. Box 11: Is it definitely filled in? This is the "key" that tells NY this isn't "normal" work salary.
   2. Box 16: Check Form IT-203, Line 1: If this is zero, but Line 16 is also effectively zero, NY thinks you’ve made an entry error on your W-2.
2. In the New York State portion of the program:
   1. Look for a screen titled "Identify the source of your New York wages" or "W-2 Wage Allocation."
   2. You will likely see the NQDC W-2 listed.
   3. Instead of leaving it at $0, look for the option to allocate by percentage or manually allocate.
   4. The Trick: NY State e-file servers often reject a "0" on the state wage line if the W-2 shows NY. To satisfy the error, some users find they must ensure the "Federal" amount and "New York" amount are reconciled in the Wage Allocation section. If the income was 100% earned/received while a non-resident, it should be allocated to your "Other State" or "Non-NY" column.

If the above fails, go back to your w2 and enter $1 in NY income box 16.

[jvmiller513]

W2 Box 11 is filled in with the same amount as shown in box 1 and box 16.

IT-203 line 1 is zero, box 16 has the amount from W2 box 11.

In the allocation section, it asked if all my wages and self employment income was earned in NY, I said yes, so I didn't get the allocation screen.  Should I say no and then allocate the NQDC W-2 at 100%?

[jvmiller513]

When I answered no to the allocation question, I noticed that the NQDC W-2 showed zero for the wages.  changing the allocation methodology didn't change it - it always read zero.

Perhaps I need to delete this W2 and add it in again manually?

[PatriciaV]

Yes, re-entering the W-2 may resolve this issue. Be sure to follow the previous instructions from Expert AmyC during the NY state interview.