Last year I used TurboTax to pay federal and NY state income taxes and was hit by a penalty by NY state because I didn't report the right wages. This despite following the TurboTax instructions faithfully and reporting what was listed as State wages on the W-2. I am trying to avoid that happening this year, but I can't find a way to make TurboTax do anything differently than last year. I would appreciate any help!
My situation: W-2 Box 1 and Box 16 (state wages) are the same. There is an amount in Box 12 reflecting how much I paid into an optional retirement plan. Box 3 (social security wages) is equal to Box1 + Box 12. Does NY want me to report and pay taxes on the Box 3 wages instead of what TurboTax is doing (using Box 16)? This is nowhere in the guided questions or Help. If so, is there a way to force TurboTax to use the correct wages?
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Not sure why you are having a problem. If you enter your W-2 exactly as it appears when you prepare your federal return, the information flows to the state return automatically. You have to enter all of the boxes from your W-2 into your federal return, and let the software do its job.
I'm not sure why I am having a problem either. The W-2 information was entered correctly (I double-checked when I got the penalty letter). They wanted me to pay income tax on the Box 3 wages, not Box 1 or 16 (state). Apparently the reduction in wages that the IRS allows for the retirement plan payments is not allowed by NYS? I have not been able to find that information on their website anywhere or within TurboTax.
What is the code in box 12 for this "optional retirement plan?"
The code in Box 12a is E. The only other Box 12 is 12b, which is DD.
The New York Instructions clearly state (page 17) that "Do not enter contributions to a section 401(k) deferred arrangement, section 403(b) annuity or section 457 deferred compensation plan." I.e., don't add contributions to a 403(b) back to New York state income.
Did the State give you a reason for the income adjustment?
Thank you for the helpful info! Now that I read that I am really wondering myself. They didn't say much more than what I said. I need to go deeper into it with them.
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