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How do I adjust my State w-2 wages for deferred compensation that is not taxable

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January 30, 2023
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I file income tax returns in multiple states. I am retired and a resident of New Jersey. I formerly worked in New York. My reported taxable W-2 Box 16 wages in New York equal my Federal Box 2 and New Jersey Box 16 wages. However, a significant portion of my wages represent deferred compensation distributions that are being paid to me over 15 years, and the distributions are not taxable in New York. In 2022, my former employer reported in Box 14Z the amount of my taxable New York wages, which excludes the deferred compensation distribution. So, how do I adjust my New York tax return to only be taxed on the taxable portion of my wages in Box 14Z, rather than the full amount in Box 16, for New York State tax purposes?

TurboTax Online

Best answer by ErnieS0

You’ll need to complete Form IT-203-F in TurboTax to allocate your New York wages over multiple years:

Tap State Taxes in the left column
Tap Your State Returns
On "Status of your state returns," tap Continue next to New York
On "New York Income Allocation," say NO to Were all your wages and/or self-employment earned in New York State?
On "Your Form W-2 Summary," Edit next to your W-2
On "Allocate Wages to New York," select Allocate over Multiple Years
You’ll come back to "Your Form W-2 Summary." Tap Done.
On "Multi-Year Allocation of Wages" complete Form IT-203-F in the window, then Continue

IT-203-F is used by nonresidents who received certain income related to a

profession or occupation previously carried on both within New York State and outside New York State (for example, termination agreement or covenant not to compete) or have compensation from stock options, restricted stock, or stock appreciation rights as a nonresident (including a part-year resident if compensation is recognized during your nonresident period) that must be allocated to New York.

IT-203-F instructions

E

ErnieS0Answer

You’ll need to complete Form IT-203-F in TurboTax to allocate your New York wages over multiple years:

Tap State Taxes in the left column
Tap Your State Returns
On "Status of your state returns," tap Continue next to New York
On "New York Income Allocation," say NO to Were all your wages and/or self-employment earned in New York State?
On "Your Form W-2 Summary," Edit next to your W-2
On "Allocate Wages to New York," select Allocate over Multiple Years
You’ll come back to "Your Form W-2 Summary." Tap Done.
On "Multi-Year Allocation of Wages" complete Form IT-203-F in the window, then Continue

IT-203-F is used by nonresidents who received certain income related to a

profession or occupation previously carried on both within New York State and outside New York State (for example, termination agreement or covenant not to compete) or have compensation from stock options, restricted stock, or stock appreciation rights as a nonresident (including a part-year resident if compensation is recognized during your nonresident period) that must be allocated to New York.

IT-203-F instructions

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J

JenkinseAuthor

Thank you very much ErnieSO. I appreciate your response, and I intend to incorporate your guidance for my 2022 tax return. Although I was aware that my deferred compensation was not taxable in New York, somehow I did not pay attention to/or forgot to notice this issue in preparing my 2021 tax return. So, I will have to file an amended tax return in New York and in New Jersey as I have the same issue in 2021, and for that year my former employer did not input data in Box 14Z. I do have my 2022 and 2021 pay stubs, which clearly indicate the portion of my wages that are taxable in the various states.

Regards, Jenkinse