TurboTax complains that my Federal and State W2 gross is not identical - but that's the fact

[tkmcneil]

Subject kinda says it.  I qualified for a Deferred Comp Plan a couple decades back and deferred a bunch. Started receiving DCP payments about 7 years ago after employment ended and the W2 has shown that difference every year.  We'd found out that the employer had calc'd Fed amt based on non-deferred but had done the State tax amount based on total compensation (including deferred amt).  No one knew back then but that's the way the employer did it.  Now that W2 shows different amount as taxable for State - because the taxes were already taken.  TurboTax lights up that field in red and probably will complain until April...  Is there a way to calm things down and just accept that real difference?

[MarilynG1]

Have you tried requesting a Corrected W-2?

Do you have an amount in Box 11 of your W-2?  If so, that amount should be included in Wages reported in Box 1, which would probably then match amount of State Taxable Income you show in Box 16.

You may need to file a Substitute W-2, Form 4852 if you can't get a corrected W-2.

Here's some discussion on W-2 With Deferred Compensation that may help you. 

[tkmcneil]

Don't think I need a corrected W2 - the current one shows the real numbers (and it's been like this for 8 years).  Our state did send me a letter last year and I had to show them all W2s plus a letter from that employer documenting why the Federal and State numbers are different.  I don't have documented details but we'd been told back then that the state required them (employer) to calc taxes withheld based on full earnings instead of just non-deferred (but that changed after a few years...).  That employer provided the letter, I sent all the documents, and the state actually sent me a check just this past week so even they agree that the difference is real.

Is there any way to just tell my TurboTax form "this difference is OK" and have it not complain about that?

[DaveF1006]

Some clarification is needed here.  You mention that the employment ended seven years ago with that employer and as a result, you have been receiving DCP payments.  As a result, you have been issued a W2 for the DCP payments that are reported in Box 1 of your W2.

Now you mention that this same employer reported the same income as compensation (including the deferred amount). My question is, if employment ended 7 years ago, what compensation are you referring to other than the deferred amount that should have been reported as state wages? This is confusing in your narrative.

@tkmcneil 

[tkmcneil]

Sorry if this seems confusing...  Yes, my employment (and employment-based income) ended some years ago.  Back when I was employed I somehow qualified for the company's Deferred Compensation Plan and was able to defer/not receive a portion of my salary each year (and had it saved there until I stopped working).  Each year since then I have received compensation (4 payments/year) that comes from what was saved to that Deferred Compensation Plan.  That is all the compensation I now receive from that employer and is reported each year on their W2.  And each year of those DCP W2s the total compensation is reported as different amounts for Federal and State - more for Fed 'cause for the first few years of our being initially included in the DCP plan (when I was deferring) the Fed taxes were not withheld for the deferred amount but state tax withholding was done based on total income for the year (both non-deferred and deferred).  That's how it was implemented but was changed after ~3 years and withholding only done for non-deferred for both Fed and State.

The employer and our State have settled differences and understand why the difference exists - and my returns and the extra letters have all been accepted/approved by the state.  The difference is legitimate.

[AmyC]

That makes sense if you are in a state that taxes deferred income and we see this with different values from the federal in those states. I don't know why you are having trouble unless perhaps all the forms are not available? Please check forms availability here.

I entered a w2 with different amounts and got past the federal review with no errors. Where are you being stopped? What is the exact wording? Are you entering in entry mode or forms mode?