Have a new client who is a social worker for the state of MA. Box 12a only has the code DD for the cost of employer health insurance. In Box 14 there is a code Y (Deferrals under a section 409A non-qualified deferred comp plan). There is also a code Z (Income under a non-qualified deferred comp plan that fails to satisfy section 409A. This amt is included in Box 1. It is subject to an addtl 20% tax plus interest). I read the pub instructions and did include that code Z and amount in Box 12 in order to have the 20% addtl tax included on the return. I noticed the prior preparer did not include that amount in any of her returns. The client knows nothing about it. Has anyone had any codes included in Box 14 that should be in Box 12? I always look at what the codes are, but never ran into this one before. Thanks for any responses.
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It used to happen a lot, less frequently now-a-days as W-2 issuers have become more proficient at proper reporting. I would follow the same procedure you did. -
There are legitimate circumstances when neither code Y nor code Z are required to be reported in Box 12. See the form instructions.Originally posted by Burke View Post
I would not be so quick to possibly harm your client by mis-reporting something as taxable and subject to penalty when the employer indicated it was not. It is almost never our job as tax preparers to correct or second guess a W-2.
Without additional evidence from paystubs, employer documentation, and so on, I would simply report the W-2 as filed. If the client "knows nothing about it", then it is time for the client to find out."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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I pointed the W2 issue out to the client and told her to check with her employer on what that Code Y and Z are in box 14. She said she would. I told her that I will be glad to do amendment if needed. I mentioned that we could wait to e-file, but she wanted her large refund and said the amendment would be ok to do later if necessary. I heard that some companies do their own breakdown of items in box 14 that don't even relate to the letters used in box 12. I have seen some that don't use letters, but at least describe the item. And if the letters are used, at least most of them do not affect any additional tax like code Z does. I did read the publication and it did appear that I should do it the way I did. Time will tell!!
Thanks for both of your responses.Comment
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Box 14 is usually informational only. I've seen Y used for nontaxable flexible spending accounts and Z for MA.
Was the W-2 prepared by a firm that should know what they're doing? ADP, Paychex, or a large company that's been in business awhile? Or is it a small firm with a relative doing the bookkeeping? Do you have the last paystub? Did your client ask payroll what is in Box 14? Did you?
Do not mix up codes between Boxes 12 and 14 in Box 14.Last edited by Lion; 03-19-2018, 06:08 PM.Comment
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The W2 is from Commonwealth of Ma so I am sure it is a professional firm that prepared it. I don't have the last pay stub, but I will ask her for it (didn't think of that, darn it!). I showed her the W2 and what the issue was. I explained what that code Z normally means and showed her the back of the W2 where it explains the codes. She had no clue on what it was for. I told her to ask her employer. She didn't know who I could call but was going to find out. There was no info on the W2 on who I could contact. Although the return is done, I will find out what that code and amount is for, and will do an amendment if necessary. She was ok with using that amount even though she got an additional tax on it. She said she would rather file the return now so she could get her large refund and just do the amendment later if necessary.Originally posted by Lion View PostComment
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The Commonwealth of MA is the state of MA, so they should know how to report nontaxable state benefits, such as a nontaxable flexible spending account that includes MA qualified health care premiums, for example. And, I doubt they would use Box 12 codes in Box 14.
I have only one MA resident, and she's still young enough to be on her parents insurance in CT. But, someone from MA will jump in here to help you with what's reported in Box 14 of a MA public employee's W-2.Comment
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14Y is Pre-tax Retirement
14Z is Pre-tax Health InsuranceComment
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Thanks a lot!
Lion,
Thanks a lot for that link. It is exactly what I needed. I have printed it and will share it with others that need it. I can now do an amended return knowing how to handle in the future. Thanks again!!!Comment
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SupersedingRreturn
Now that I know that I completed the return by including the amount for the MA health insurance (Z) on the W2 in the wrong box that generated the additional tax, I am wondering if I should do a superseding return and not wait to do an amendment after the client gets his refund. I would like to in order to get the return corrected, but I don't want to muddy the waters by doing so.
I checked the refund status of the return online. It is being processed, but unlike other normal refund status responses, this response noted "Please read the following information related to your tax situation: Tax Topic152. Refund Information". I checked the topic. It really didn't say anything that would lead me to believe they are checking on this problem, but apparently something is triggering this note.
I was wondering if I could get anyone's opinion on whether it would be wise to wait to do an amendment instead. If I did a superseding return, does that take months to be taken care of by the IRS? I never did one before. The client understands what happened, and has no problem getting his refund and waiting for me to do an amendment for the additional refund of the additional tax due to my error. But if I can do the superseding return and have the corrected refund processed quicker, I will do it. Even though it hasn't been long since e-filing, I plan on calling the IRS next week just to see if I can get any info from them.
Thanks for everyone's continued help!!! Really appreciated.Comment
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