Discussion:Retirement credit buyback

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Discussion Forum Index --> Tax Questions --> Retirement credit buyback

DeborahNY (talk|edits) said:

25 February 2010

I have a client who bought credits towards his NY retirement from previous state service.

He paid a lump sum (was offered periodic but wanted to get it over with).

I realize since he was buying back credits that this is not tax deductible, however I received conflicting information about reporting it.

I was told by one person to put the info in box 14 even though it does not appear on his return and another who said I don't need to do anything.

Any insight would be helpful. Thank you in advance.


Trillium (talk|edits) said:

7 March 2010
Can you clarify - when you say "put the info in box 14" are you preparing the W-2 for your client's employer, or are you talking about how you enter the info into your tax software? And when you say "does not appear on his return" are you saying that the purchase of retirement credits did not appear on his W-2 that he already received?

This transaction should only show up on his W-2 if his employer allowed the service credits purchase to be done on a pre-tax basis. If your client used pretax money to purchase the service credits, then that should have reduced his W-2 taxable wages and should have been shown in one of the info boxes on the W-2. However, if he purchased the service credits on an after-tax basis, then there would be nothing for the employer to report on the W-2, but of course then he'd have basis, which you might want to help him track.

R2 (talk|edits) said:

7 March 2010
I see no reason to include this on the W-2 form at all.

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