Tax Time Uncovers Hidden Assets
This seemingly simple income form tells many stories. The place you want to pay very close attention to: Box 12. Box 12 will tell you if there is a 401k, a Roth IRA, an executive compensation account including stock options or restricted stock and even a deferred compensation account. Here are some codes and definitions that are especially important in divorce.
This seemingly simple income form tells many stories. The place you want to pay very close attention to: Box 12. Box 12 will tell you if there is a 401k, a Roth IRA, an executive compensation account including stock options or restricted stock and even a deferred compensation account. Here are some codes and definitions that are especially important in divorce.
- D, E, F, G, S, and H: These codes give you information about contributions to your retirement plan at work, and they are for your information only:
o D:401(k) plan
o E:403(b) plan
o F:408(k)(6) plan
o G:457(b) plan
o S:408(p) salary reduction SIMPLE retirement account
o H:501(c)(18)(D) plan - K: Excise tax for excess golden parachute payments. If you have this code on your W-2, you cannot file a Form 1040EZ.
- L: Your employer reimbursed you for employee business expenses that you paid out of your own pocket and the amount you received as a reimbursement is greater than the amount you actually spent.
- R: Your employer made contributions to an Archer MSA (medical savings account) for you. If you have to pay tax on any of the contributions, the amount is already included in Box 1 of your W-2. If you have this code on your W-2, you cannot file a Form 1040EZ.
- V: Your income from the exercise of non-statutory stock options. This amount is included in Box 1 of your W-2. This is a big one! Get statements on that account!
- W: Employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to your health savings account. Reported on Form 8889, Health Savings Accounts (HSAs).
- Y: Deferrals under section 409(A) on an nonqualified deferred compensation plan.
- Z: Income under section 409(A) on a nonqualified deferred compensation plan. This amount is also included in Box 1.
- AA: Designated Roth contributions under a section 401(k) plan.
- BB: Designated Roth contributions under a section 403(b) plan.
- EE: Designated Roth contributions under governmental section 457(b) plan. This amount does not apply to contributions under a tax-exempt organization section 457(b) plan.
If you see ANY of these codes, there is MORE information to get and frankly it can be pretty complicated. This is the type of thing that a CDFA® practitioner specializes in and can ensure that all your bases are covered. Contact us at Smarter Divorce Solutions or find a good one in your area to add to your divorce team at www.InstituteDFA.com
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