I left my job in April 2021. I have deferred compensation distribution starting in October. Will that income report in W2 and be taxed as ordinary income in 2021?
As a second opinion-Deferred compensation distributions will be typically reported on form 1099-R, from which, box 2a of the form will be taxed as ordinary income. The form will also provide other important information such as Box 4. Federal Income tax withheld, and Box 7. distribution code, along with other important information. Please see link below.
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Hope that helps,
what type of deferred comp. is it a return of money put into a retirement a/c? if so, then you should have the option of a direct rollover into an IRA. if you get the cash instead, you have 60 days to put it into a retirement a/c otherwise you will owe not only income taxes but probably penalty taxes on early distribution if under 55.
if it's deferred wages, RSUs, ISOs, etc then it will be taxed as ordinary income.
Thank you for the follow-up. It is from deferred wages. If it will be taxed as ordinary income, can the taxable amount be reduced by OPEX if I invest them in an oil drilling project?