58369

[#1]

The following diagnostic is generating: FORM W-2 #1: CONTAINS AMOUNTS FOR (11) NONQUALIFIED PLANS OR WAGES EARNED WHILE INCARCERATED. THESE AMOUNTS ARE REPORTED ON THE SCHEDULE 1 AND ARE NOT INCLUDED IN THE WAGE AMOUNT REPORTED ON FORM 1040. THIS RETURN WILL BE REJECTED AND MUST BE FILED ON PAPER. THE IRS IS REVIEWING THE APPLICABLE BUSINESS RULE AND WILL BE ADDRESSING THIS ISSUE IN THE FUTURE.

[dale]

These amounts moved to Schedule 1 this year. Apparently the IRS is not ready for this change. Is there any indication as to when this will be corrected?

[Eaglelion]

Received same diagnostic?  While incarerated makes zero sense.  Not even sure what this means.  

[Carol65]

I am having the same issue.  Is there a way to find out when this will be resolved?

[crystalcpa]

I received the same diagnostic and the Lacerte rep sent me this link to read.

I havent researched it yet but if I use box 12 and Y the diagnostics disappears, and the return can be efiled. 

https://www.irs.gov/instructions/iw2w3#en_US_2023_publink1000308302

Nonqualified deferred compensation plans.

Section 409A provides that all amounts deferred under a nonqualified deferred compensation (NQDC) plan for all tax years are currently includible in gross income to the extent not subject to a substantial risk of forfeiture and not previously included in gross income, unless certain requirements are met. Generally, section 409A is effective with respect to amounts deferred in tax years beginning after December 31, 2004, but deferrals made before that year may be subject to section 409A under some circumstances.

It is not necessary to show amounts deferred during the year under an NQDC plan subject to section 409A. If you report section 409A deferrals, show the amount in box 12 using code Y. For more information, see Notice 2008-115, 2008-52 I.R.B. 1367, available at IRS.gov/irb/2008-52_IRB#NOT-2008-115.

Income included under section 409A from an NQDC plan will be reported in box 1 and in box 12 using code Z. This income is also subject to an additional tax of 20% that is reported on Form 1040 or 1040-SR. For more information on amounts includible in gross income and reporting requirements, see Notice 2008-115, available at IRS.gov/irb/2008-52_IRB#NOT-2008-115. For information on correcting failures to comply with section 409A and related reporting, see Notice 2008-113, 2008-51 I.R.B. 1305, available at IRS.gov/irb/2008-51_IRB#NOT-2008-113; Notice 2010-6, 2010-3 I.R.B. 275, available at IRS.gov/irb/2010-03_IRB#NOT-2010-6; and Notice 2010-80, 2010-51 I.R.B. 853, available at IRS.gov/irb/2010-51_IRB#NOT-2010-80.

[Carol65]

CrystalCPA,

Thanks so much for your help with this!