For most returns, Form 1040 Line 1, “Wages, Salaries, Tips, etc.” consists of income reported on Form W-2. There are two important sources of income reported on this line that may not be reported to the taxpayer on Form W-2:
- Wages of less than $2,100 received as a household employee;
- Scholarship and fellowship grants.
These two sources of income, along with other information, are entered in the Other Compensation Menu. To access this menu, from the main menu of the tax return (Form 1040) select:
- Income
- Wages, Salaries, Tips (W-2)
- Other
W-2 Default State – Enter the two-letter state abbreviation to always show on line 15 of the Form W-2 entry window.
W-2 Default Locality – Enter the locality name to always show on line 18 of the Form W-2 entry window.
Foreign Employer Compensation – In Keystone Tax Solutions Pro, there are two places where foreign employer compensation can be entered: here and in the Form 1099-R menu. Click here for more information about this menu line.
Taxpayer’s / Spouse’s Scholarships, Grants – Enter on this line scholarship and fellowship grants not reported on a W-2. Degree candidates should include only amounts received for other than tuition and course-related expenses, e.g., room, board, and travel
Taxpayer’s / Spouse’s Fringe Benefits Included on Form W-2, Box 1 – Employers generally include taxable fringe benefits in Box 1 of Form W-2 and also report them in Box 14 on the W-2. Answer YES to this line if any W-2 includes fringe benefits in Box 1.
Taxpayer’s / Spouse’s Household Employee Income – Enter on this line the household employee income not reported on a Form W-2.
Taxpayer’s / Spouse’s Prisoner Earned Income – Prisoner income is generally entered in the return via Form W-2 or a substitute W-2. The amount on this line will be deducted for EIC purposes.
Scan Form W-2 2D Barcode – If you are entering W-2s in the program using a barcode scanner, select this line to initiate a scan.
Note: This is a discussion of the Other Compensation menu in the Keystone Tax Solutions Pro program. This is not intended as tax advice.
Additional Information: