excludable compensation from W-2 wages

Forum|Forum|5 years ago
March 11, 2021
2 replies
22 views

A client who is a police officer & was injured while on duty, received a letter from the the city that read as follows.

The amount identified below as EXCLUDABLE COMPENSATION is in lieu of workmans compensation and is excludable from income as per IRS Technical Advice Memorandum TR 32-153-91.

The form then shows the gross amount of W-2 wages he received while injured, which is included in box 1 of the W-2; it then shows the amount that should be deducted as excludable.

I can't find where to put that info in the W-2 worksheet.

ProSeries Basic

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IntuitAustin

Level 10

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BobKamman

Level 15

Did that come from the City of Chicago, by any chance? I'm not asking because a lot of Chicago police officers were injured last year, but because there's an example of the notice online:

https://dqjghx1vau0u.cloudfront.net/uploads/assets/30690/original.pdf?1454507714

At the bottom it says to attach the notice to the tax return.

The city probably does not want to issue a corrected W-2 because they use the Box 1 amount for other purposes, like calculating pension benefits. And I'm guessing that its public-safety workers are covered by Social Security, so there are no amounts in Boxes 3 and 5.

Others have asked the question online and the answer has been to subtract it out on Schedule 1, Line 8, as a negative number for "other income." I don't think that's the best solution, but it's probably the only one for now.

That TAM number does not exist -- maybe it has been renumbered, or obsoleted.

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