Where do you enter a non-qualified deferred compensation plan payment?

[Foxmwf]

I have a 1099-MISC with the total payment. About 30% of that should not be taxable because of my basis. The contributions to the non-qualified plan were previously subject to social security and Medicare tax.

[ThomasM125]

If the full amount of the payments is showing as taxable on your return after you enter you form 1099-MISC, and you determine that they shoud not be, you will need to enter a negative adjustment to income to make the reported income correct as follows:

1. Choose the Federal option on your left menu bar
2. Choose Wages & Income
3. Find Less Common Income in the list of income sources
4. Use the Show More option to expand the choices and choose Miscellaneous Income, 1099-A, 1099-C
5. Choose the Other Reportable Income option and find Other Taxable Income in that section
6. Enter a description for your adjustment and the amount as a negative number

[Foxmwf]

Thanks for the answer. I don't think it will help with the second portion, that the income is not subject to further FICA or Medicare withholding (IRC Section 3121(v).  The best I have figured out is to manually enter the taxable amount on Schedule 1, line (8z) and then include a statement of explanation both as to how the taxable/non-taxable amount was determined and make clear that the payments are not subject to further withholding under FICA and Medicare.  Unless there are recent changes, it appears that means I will not be able to file electronically, as TurboTax does not allow the filing of any explanatory statements with a tax return that is filed electronically. Instead I will have to print it out, add the statement and file by mail. If anyone knows another way, I would appreciate the information. 

[ThomasM125]

I am not sure why you mention FICA and Medicare tax, as that would not be paid in on a personal tax return. Whatever FICA or Medicare tax withheld would not be adjusted by filing a personal tax return unless your income exceeded the FICA wage limit because you had income from more that one employer. In that case you could get a refund on your personal tax return for the excess FICA tax.

You will need to mail in your tax return if you want to attach a statement like you suggest.

[pjn]

Not sure I understand completely your payment, but I have done cases and also has happen to me where I have stock options that are taxed when granted creating basis. If it is, then you can also show the portion that was subjected to FICA on Schedule D with basis and proceeds as the same amount and compute the rest of the gain or income as normal.