TaxGuyBill
Level 15
03-11-2024
06:53 PM
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IRS Notice 2008-1 explains that it is taxable income to the employee.
That means the W-2 is wrong and either needs to be amended or file Form 4852 to show the correct taxable amount. In my opinion, there isn't really any way around that.
And because it will be added to the corrected W-2 or 4852, you can use the Schedule 1 deduction.