Why is there a zero on line 1a of my return when I input W2 information in during the interview process. The total AGI is correct._

[MoniqueLO_]

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@G2G0 
 

[G2G0]

Thanks, but I’m referring to the output on the actual pdf. My return shows a zero in line 1a where wages from a W2 are to be entered. These wages are actually from a Pension fund, so I’m assuming that’s why TTax lists the income as if it were on a 1099R. That did not happen last year, so I’m confused. 

[CatinaT1]

When you say your wages are from a pension fund, I'm not sure what that means. Was it a distribution from a pension fund?

Line 1a will show wages from a W2. Disbursements from a pension fund are not wages and will show on lines 5a or 5b.

Please let us know if you have additional questions.

[G2G0]

Thank you. The W2 in box 1 shows: $xxxxx. Then in box 11 (Nonqualified Plans) shows the same amount. Instead of reporting this income in line 1a, it appears on line 8t of schedule 1 and then brought forward to line 8 of 1040-SR. In past years it was reported on line 1 of 1040-SR. Just trying to understand what is different. 

[JohnB5677]

Do you have entries in boxes 3 & 5, and do you know what those boxes were in 2021?

From W-2 instructions: Page 18
 

"Box 11—Nonqualified plans.    The purpose of box 11 is for the SSA to determine if any part of the amount reported in box 1 or boxes 3 and/or 5 was earned in a prior year. The SSA uses this information to verify that they have properly applied the social security earnings test and paid the correct amount of benefits.

  Report distributions to an employee from a nonqualified plan or nongovernmental section 457(b) plan in box 11. Also report these distributions in box 1. Make only one entry in this box. Distributions from governmental section 457(b) plans must be reported on Form 1099-R, not in box 1 of Form W-2."

Under nonqualified plans or nongovernmental 457(b) plans, deferred amounts that are no longer subject to a substantial risk of forfeiture are taxable even if not distributed. Report these amounts in boxes 3 (up to the social security wage base) and 5. Do not report in box 11 deferrals included in boxes 3 and/or 5 and deferrals for current year services (such as those with no risk of forfeiture).

[MikeChicago]

The reply does not answer the question.   I have what looks to be the exact same situation.  A dollar amount was reported to me on W-2 in box 1 (wages) and same amount in box 11 (nonqualified plans).  (In answer to the question in the reply, I have no entries in boxes 3 and 5 of the W-2 in eater 2021 or 2022, and assume neither did the person who first raised the issue).  For 2021, Turbotax carried the amount in boxes 1 and 11 of the W-2  to box 1 of my Form 1040; but for 2022 it reports zero in box 1 and instead reports it on Schedule 1, box 8t, which then flows to 1040 box 8 (other income).  So I seem to have the same issue as the person who first raised the question.  Is one of the Turbotax treatments (2021 or 2022) incorrect, or did the IRS change how this situation is supposed to be reported on an individual tax return in 2022?  I look forward to clarification. Thanks.

[MichaelG81]

It depends, how your nonqualified plan reported the earnings/distributions in 2021, and which codes and boxes they used. Here are the Instructions for 2022, 1040 filing. Indicated on page 18 is for nonqualified plans. There have been situations where it's reported one way, then they report another in different years depending on plan administration. Check your nonqualified form you received last year, and compare, not just the comparisons from the return, but the actual form received from your nonqualified plan. From what I gather and assume, it was still taxed correctly in 2021, even being carried into a possible different line (1a last year, taxable line as well). There was a change for 2022.

@MikeChicago 

[MikeChicago]

Thanks for your quick and helpful reply.  First let me respond to your suggestion about checking the the actual forms.  I did that and the W-2s for 2021 and 2022 have entries in the exact same boxes (compensation in Box 1; withholding in box 2; and nonqualified plans in box 11 equal to the box 1 compensation).  There are no entries in any of the other numbered boxes for either year. (These W-2s were issued by a major financial institution.)  

Thanks for including the "What's New" section of the 2022 instructions.  I do see that 8t is a new line in Schedule 1 for pensions from a nonqualified deferred compensation plan, and right before your reply I discussed this with Turbotax phone support.  His resources advised to edit out the amount in box 11 of the W-2 entered in Turbotax (change it to zero) in order to force the compensation to appear on line 1 of the 1040.  This might make sense becausethat the "Instructions for Employee" on the back of the 2022 W-2 states "Box 1. Enter this amount on the wages line of your tax return."  But as previously indicated, Turbotax instead places it on Schedule 1, line 8t, which then flows to line 8 "Other Income" on the 1040.   I will be happy to use this workaround if it is supposed to be reported on line 1 of the 1040.  But I am hesitant, because I am not comfortable changing the number reported to me in box 11 to zero unless it is a legitimate workaround to correct incorrect handling by Turbotax.  With the addition of line 8t to Schedule 1, perhaps it should be reported there and Turbotax is handling it properly.  Are you able to tell me which is the proper reporting?

[G2G0]

I’m glad you were able to get some better responses than I did. I decided to leave mine as is and report it on Schedule 1, line 8t. Rationale being, the income is still reported and taxed. My return was accepted by the IRS, but I do hope TT figures this out. 

[MikeChicago · Accepted solution]

I agree that ultimately it shouldn't matter because the bottom line tax is the same. But I'd rather avoid the unnecessary hassle of a flagging of the return if their computers attempt to match W-2 amount to line 1 amount if Turbotax is not handling it correctly.  There should, however, be an answer, even though the IRS instructions on the back of the W-2 seem to be conflicting with the purpose of the new line 8t on Schedule 1, and are certainly not clear.  Here's the email I got back at my request following my phone call with support, which the rep said was the guidance that all the reps have access to:

Dear TurboTax Customer,
Thank you for contacting TurboTax Support.

Here is the information we discussed during our call:

You should leave box 11 blank when entering the W2 form in TurboTax.  Go back and edit the W2 and blank out box 11 and continue through the follow on questions to complete the W2 entry. 

 There was an amount in Box 11 on your W2 and that you answered in the follow on question in TurboTax after entering the W2 information that the amount was taken out of your non qualified plan. Essentially what happens then is the amount is taken from box 1 and put on line 8t on Schedule 1.  It is still taxable in the same way no matter which line it is on.   

According to the instructions for the W2, the amount in box 11 is only informational for the taxpayer.  The Social Security Administration uses the number in  box 11 to verify that they have properly applied the social security earnings test and paid the correct amount of benefits.  The SSA already has their copy of your W2 for their purposes.  

This box has no affect on your income taxes.

[LindaS5247]

Your W-2 is reporting a distribution to you from an unqualified plan, and not actual wages paid to you.  This should be reflected in Box 1 and Box 11 of your Form W-2.

The prompts in TurboTax are asking if the box 11 amount is a distribution, answer yes here. 

This box, 11, reports any amounts that were distributed to you from your employer's non-qualified deferred compensation plan or non-government Section 457 pension plan. The amount in Box 11 is already included as taxable wages in Box 1. 

So it would be fine, per the above, to leave Box 11 blank when entering your Form W-2.

It should not affect your taxes due or refund due, it is more about getting it on the correct line. When you make withdrawals or begin taking regular payments from the annuity, that money will be taxed as ordinary income.

As always, keep all documents with your tax records.
 

[MikeChicago]

Thanks for that.  But I still wonder why we need to essentially override how Turbotax treats it by zeroing out the entry in Form W-2 box 11 in order to force the amount to Form 1040 line 1a.  Why doesn't Turbotax just fix it in the next program update?

[G2G0]

Precisely. And not to be a whiner, but we shouldn’t be paying good money to TT when we are having to use “work-arounds.”

[DMarkM1 · Accepted solution]

You do not need to use a workaround.  For 2022 the proper line for the box 11 amount that is a distribution as deferred compensation is schedule 1, line 8t.  This is new.  The amount will be removed from line 1a so that it is not double taxed.  

Having said that, if you leave the amount on line 1a by removing it from box 11 (reported on schedule 1, line 8t), your tax calculations are still the same. 

Ultimately the box 11 amount is informational for the Social Security Administration (SSA) to properly allocate for social security calculations.  So as long as the amount is taxed properly on your tax forms you are good with the IRS.