I have found the information for this income and I understand 20% tax, but the box instructions on the W2 say "plus interest" and that's where the clouds kick in. TaxWise does not calculate the tax or the interest. Lovely, right? So, I have looked up all the information and it comes down to these 2 paragraphs:
"[409A(a)(1)(B)(i)](II) an amount equal to 20 percent of the compensation which is required to be included in gross income. ***the amount IS included in client's w2***
[409A(a)(1)(B)](ii) Interest. �For purposes of clause (i), the interest determined under this clause for any taxable year is the amount of interest at the underpayment rate plus 1 percentage point on the underpayments that would have occurred had the deferred compensation been includible in gross income for the taxable year in which first deferred or, if later, the first taxable year in which such deferred compensation is not subject to a substantial risk of forfeiture."
My client says he never saw this money. It never came to him. We all know that doesn't really matter...
I called the IRS and they don't have a clue. They said to call a tax attorney. I asked the agent to repeat her name so I would know who to charge with interest when this return bites me in the butt.
If no one here knows any more about the interest than the IRS knows, I'm not going to worry about it. I'll tell the client that there may be some interest, but I don't know how much.
It's too late in the season to chase bunnies... and I really don't want anyone else out there chasing them for me, either~~~ just thought if someone else had come across this before, they might shed some light on the interest...
"[409A(a)(1)(B)(i)](II) an amount equal to 20 percent of the compensation which is required to be included in gross income. ***the amount IS included in client's w2***
[409A(a)(1)(B)](ii) Interest. �For purposes of clause (i), the interest determined under this clause for any taxable year is the amount of interest at the underpayment rate plus 1 percentage point on the underpayments that would have occurred had the deferred compensation been includible in gross income for the taxable year in which first deferred or, if later, the first taxable year in which such deferred compensation is not subject to a substantial risk of forfeiture."
My client says he never saw this money. It never came to him. We all know that doesn't really matter...
I called the IRS and they don't have a clue. They said to call a tax attorney. I asked the agent to repeat her name so I would know who to charge with interest when this return bites me in the butt.
If no one here knows any more about the interest than the IRS knows, I'm not going to worry about it. I'll tell the client that there may be some interest, but I don't know how much.
It's too late in the season to chase bunnies... and I really don't want anyone else out there chasing them for me, either~~~ just thought if someone else had come across this before, they might shed some light on the interest...