Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.
Q: I am a 65-year-old retiree. I receive payouts of deferred compensation from a life and annuity insurance company. I received a W-2 form that reports the amount of the payout as wages. Shall I list the payout as wages? Do I tell Social Security that I am receiving wages, or do I list this deferred compensation payout at some other place on the tax return?
A: Since you received a W-2 Form, you should report the income as wages on your return. Assuming you were a life insurance salesperson employed by the company, renewal commissions for insurance policies are considered wages when paid, if you were an employee at the time the policy was written. Keep in mind, Social Security can be reduced if you are working after your benefits start, depending on the amount of your earnings. Since the compensation you are receiving is attributable to services performed before retirement, your benefits should not be reduced, but you will need to explain this to the Social $H Security Administration.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.
To submit a question, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; state the question in full. Push 2 to hear a tax tip. Selected questions will be answered in the Business section. No questions will be answered by phone. Please leave your name and phone number.