NYS Pension Exclusion for Deferred Comp reported on a W-2

[cleve59]

I receive a W-2 from a former employer for yearly payments from a non-qualified deferred comp plan.  It's really a pension, rather than wages, but they must issue a W-2.  Based upon the following from a NYS Taxation Forum, I believe that I'm eligible for the 20k pension exclusion:  

New York State Department of Taxation & Finance
Common questions and answers about pension subtraction adjustments
Nonqualified Pensions and Annuities
Q: If a retired executive receives periodic payments from a deferred compensation plan that isn’t
considered a qualified pension plan under the IRC, and the payments were considered wages under IRC
3121(v), do these payments qualify for the $20,000 pension and annuity income exclusion under Tax
Law section 612(c)(3-a)?
A: Yes. The IRS determined that payments received from the nonqualified plan were wages for federal
income tax purposes and were reported on a Form W-2 (only the amount in Box 11 – Nonqualified plans
– is eligible for the exclusion). However, it was ruled that the nature of the payment is intended to be
pension or annuity, which qualifies for the subtraction modification when certain criteria are met

Unfortunately, Turbo Tax doesn't seem to be able to have W-2 income be eligible for the NYS pension exclusion.  When I did an override, I was unable to e-file (which NYS requires).  This is clearly a software issue, any suggestions as to how to proceed?  Thanks

[DaveF1006]

It depends. According to the following NYS link, "The IRS determined that payments received from the nonqualified plan were wages for federal income tax purposes and were reported on a Form W-2 (only the amount in Box 11 – Nonqualified plans – is eligible for the exclusion). 

To clarify, is there an amount listed in Box 11 on the W2?

[cleve59]

Yes, box 11 contains the same figure as Box 1.

[DaveF1006]

@cleve59  Are you using Turbo Tax Desktop software, or Turbo Tax online? If using the software, you can enter the amount listed in Box 11 directly on line 26 on the It-201, up to $20,000.  To do this, select forms in your Turbo Tax Desktop software and navigate to IT-201 listed on the left pane of the page.

If you are in the online version, let me know and I will instruct you how to switch to desktop so you can exclude this.

[cleve59]

I bought the product at Sam's Club.  There was no CD, so I would assume I have the online version.  Am I correct?  Thanks  

[DaveF1006]

No, if you bought the product at Sam's Club, it's not the online version but may be a download. Let me ask this however, do you have to log in to your account by using a username or password or do you just open up the program that is installed on your computer?  

[cleve59]

I do not have to sign in when the tax program loads, so I suppose it's not the online version, but a download.  FYI - When I originally did a 20,000 override on the IT-201 line for the pension exclusion, it passed all edit checks, but failed when I went to e-file (which is mandatory in NY).      

[RobertB4444]

@cleve59  What error message did you receive when it failed to efile?

[cleve59]

After the “We need to make one more check”, a “Check this entry” message appeared. It showed line 29 of the IT 201 highlighted in red (with the 20k figure I had put in as an override). It next reminded me of the override and prompted me to “cancel override” - (which I didn’t and don’t want to do). It also said that I would not be able to e-file the return with a change/overridden amount on a form. When I ignored the cancel request and continued to e-file, it brought me back to the “we need to make one more check” page. 

[DaveF1006]

On your IT-201 form, line 29 should be brown, which means you should be able to enter the amount without an override. Erase the entry in the box and just see if you can make the entry without selecting override. 

It works in my program.  Also you may need to perform an update in your software program. At the top left of your program, go to online>check for updates.

[cleve59]

When I cancelled the override, the number from a small inherited IRA distribution took its place.  I then looked for and found a box on the IRA worksheet that allowed me to make that distribution unavailable for any pension exclusions.  Then, when I went back to Line 29 of the IT-201, it was blank.  I was then able to type in the 20k figure as you had instructed.  Long story short, it worked.  I was then able to successfully e-file.  Thank you so much for your assistance.