Feb 11, 2008

Retirement Plans and Form W-2

QUESTION: I have a question about my son's Income Tax Return. He was recently deployed to Afghanistan and left me Power of Attorney for all his taxes, etc. My question is about the taxable wages and retirement plan. He enlisted as PFC and is now SPC 101st AB Div; for simplicity let's say his Taxable Wages in Box 1 is $19,000 and the Soc Sec wages is $18,000 (box 3). The retirement box is checked but I have no paperwork regarding this. My son was not aware that he had a retirement plan. I am guessing that he contributed $1000 to this plan? How do I proceed with his tax return? It would otherwise be a simple return, if not for this one item.

ANSWER: On the W-2 form, the Retirement Plan box is checked to indicate that an employee is covered by a qualified retirement plan sponsored by the employer (in this case the armed forces). A checked box does not necessarily mean the employee has contributed to a retirement plan. Generally, employee contributions to company retirement plans are listed in Box 12 of the W-2 form. If this is the case, be sure to complete Form 8880, Credit for Qualified Retirement Savings Contributions. In many instances, a tax credit may be taken on Form 1040 for a portion of employee contributions made during the tax year.

2 responses:

Jim,  February 12, 2008 at 9:50 PM  

Also, the difference in taxable wages and social security wages can be for a number of reasons- usually FICA wages are greater than taxable wages because of retirement plan contributions are usually not taxable.

the irsmind

Anonymous,  November 10, 2008 at 2:25 PM  

I work for a municipal government and we have a pension plan but all the wages listed on my W-2 are the same and the retirement box is checked? Is it wrong?

  © Blogger templates The Professional Template by Ourblogtemplates.com 2008

Back to TOP