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February 14, 2021
Question

Box 14 nonqualified deferred compensation

  • February 14, 2021
  • 1 reply
  • 0 views

Turbo Tax gives me an error when I enter a 1099-MISC, Box 14 entry, stating "Income under Section 409A on nonqualified deferred compensation plan is unusual and the calculations for the additional tax and interest on this are not supported."  What do I do next?

    1 reply

    macuser_22
    Employee
    February 14, 2021

    Items not supported Per TurboTax:

     

    1. Form 1099-Misc and Non-Qualified Deferred Compensation: If your Form 1099-Misc has an
    amount in box 15b for nonqualified deferred compensation plans under code section 409A, see
    IRS Publication 15-A for the calculation of the additional tax that must be reported on Form 1040.

     

    https://www.irs.gov/pub/irs-pdf/p15a.pdf

     

    This gets reported on the 1040 Schedule 2 "Other Tax" on line 8 with "NQDC" next to it.

     

    https://www.irs.gov/pub/irs-pdf/i1040gi.pdf  page 97

     


    16. Additional tax on income you received
    from a nonqualified deferred
    compensation plan that fails to meet the
    requirements of section 409A. This income
    should be shown in box 12 of
    Form W-2 with code Z, or in box 14 of
    Form 1099-MISC. The tax is 20% of the
    amount required to be included in income
    plus an interest amount determined
    under section 409A(a)(1)(B)(ii).
    See section 409A(a)(1)(B) for details.
    Identify as “NQDC.”

    This can only be done with the CD/download software on a Mac or Windows computer in the forms mode.

     

    Select the 1040/1040SR Worksheet, scroll down to Schedule 2 line 17, "Additional Other Tax Smart Worksheet" line S and enter as in my screenshot.

     

     

     

     

    The resulting 1040 Schedule 2 would look like this:

     

    **Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**