W-2, Box 14, K

[Janitor Bob]

I have never seen this before. Taxpayer is government employee and on his W-2, Box 14, there is $370.36 denoted as "K" (Tax on Excess Golden Parachute Payments)

What is this?

Same Client also has in box 14 $959.77 denoted as "V" (Income from exercise of nonstatutory stock option)...What is this?

I have never seen either of these before.

[Margaret CPA in OH]

JB, you may have made the same mistake that I did when entering some client data from the W-2. I clicked on the drop down box for Box 12, not Box 14. When I asked him about the NSO, he was puzzled and said it was supposed to be pretax health benefits. I blushed.

[OldJack]

>>$959.77 denoted as "V" (Income from exercise of nonstatutory stock option)...What is this?<<

It was income added to the W2 as a benefit received by the taxpayer and becomes a part of the taxpayers tax cost basis in the stock issued or sold. when the stock is sold it is added to cost basis on Sch-D.

[Margaret CPA in OH]

Thanks, OldJack, for a good explanation but I think JB needs to first be sure that it is in Box 12 or Box 14. I think that is a Box 12 code, not a Box 14 code.

[Janitor Bob]

Thanks, OldJack, for a good explanation but I think JB needs to first be sure that it is in Box 12 or Box 14. I think that is a Box 12 code, not a Box 14 code.

It is definately box 14

[Margaret CPA in OH]

Well, JB, then I wonder if the preparer of the W-2 has erred. I do find it unlikely that the codes for Boxes 12 and 14 would be identical. I also thought that Box 14 was for information and special purposes only. The instructions for W-2's state that the two items that you mention are to be reported in Box 12 with the codes that you state. Just sayin'

[Janitor Bob]

Well, JB, then I wonder if the preparer of the W-2 has erred. I do find it unlikely that the codes for Boxes 12 and 14 would be identical. I also thought that Box 14 was for information and special purposes only. The instructions for W-2's state that the two items that you mention are to be reported in Box 12 with the codes that you state. Just sayin'

I wondered that myself...The only thing in box 12 (a) is what client put into his 401k...denoted with "D"

I looked at his returns from prior years and his W-2s did not have the "V", but has always had the "K" in box 14

[Margaret CPA in OH]

So how likely is it that this government employee has, for multiple years yet, Golden Parachute Payments? Do government employees have golden parachutes? I thought those were creations of the corporate world and not a recurring item when still employed. None of my clients were ever so blessed with such payments so I really have no experience with that. Ask the client how s/he likes that parachute?

[OldJack]

Thanks, OldJack, for a good explanation but I think JB needs to first be sure that it is in Box 12 or Box 14. I think that is a Box 12 code, not a Box 14 code.

It does not matter which box they reported the code V (if in error) as it is still the same tax treatment.