How to report excess 2017 401-k contributions on the 2017 tax return and get them on the right line of the tax return i.e. wages, etc?

[ladylake]

This happened because 2 different employers were withholding contributions and I went over the limit.

[Rachel_W · Accepted solution]

If the excess was not distributed until 2018, you should report the excess contributions to your 401(K) on line 7 of your 2017 Tax Return without a Form 1099-R by following these steps: 

• Click on the "Federal Taxes" Tab
• Click on the "Wages & Income" Tab
• Click on "I'll choose what I work on"
• Scroll down to "Less Common Income"
• Select "Miscellaneous Income" and click Start or Update
• Select "Other income not already reported on a Form W-2 or Form 1099" and click on Start
• Answer the Question "Did you receive any other wages?  Yes
• Click through the questions until you get to "Any Other Earned Income"
• Answer Yes to "Did you earn any other wages?
• Indicate "Other" as Source of Other Earned Income and click Continue
• For the description enter "2017 Excess 401K Deferrals" and click on Done

Please comment below if this does not answer your question so I can assist you further.

[figment0]

When I entered my excess contributions as you instructed here, my federal taxes due increased.  I don't understand.  It should have decreased my federal taxes due.

[dzinn]

I am not a tax specialist, but it seems logic to me that your federal taxes increase: Say you over-contributed $2000 to your 401k. These $2000 were not included in your W2 wages and salaries because they were pre-tax contribution to the 401k, and consequently, you haven't payed taxes on them (ie, in your tax declaration these $2000 weren't taxed yet). Now, it turns out you were over-limit and the $2000 were an excess deferral -- so you should have payed taxes on them (ie, undoing the 401k contribution). Once you add the $2000 into the "other income", it will be treated as if you never contributed them to your 401k, and thus you need to pay income taxes on them (which you haven't yet) - thus increase in federal taxes.

[sharpant]

Hi,
My wife made excess 401k contribution in 2018 due to job change. We got a refund for the excess amount in March'19.
I followed the instructions in the below forum to post my excess 401k contribution. The correct amount is making its way through to line 1 and line 7, but it does not call out "Excess 401K Deferrals" in Schedule 1 or anywhere else. Is this fine?
I e-filed the tax returns. Should I file an amendment?
Hi,
My wife made excess 401k contribution in 2018 due to job change. We got a refund for the excess amount in March'19.
I followed the instructions in the below above comment to report my excess 401k contribution. The correct amount is making its way through to line 1 and line 7, but it does not call out "Excess 401K Deferrals" in Schedule 1 or anywhere else. Is this fine?
I e-filed the tax returns. Should I file an amendment?

[shyam5]

when I followed these steps, still turbotax is not letting me e-file. Is there any other steps before I can e-file? Does the form 1040, line 12b needs to be corrected?

[sharpant]

Customer support asked me to change 12b to $18,500 and it worked

[shyam5]

Thanks, Sharpant! Appreciate your quick reply. @TurboTaxRachelW - can you confirm?

[shyam5]

@sharpant - I believe tax filers are not allowed to correct W-2. Please make sure with Turbotax if IRS will accepts it or will raise a red flag since IRS will be receiving a copy of the original W-2 from employer directly

[sharpant]

I didn't correct W2. I changed a field on the TurboTax portal to make the sure work. The 12b section does not show up in your tax returns.
Again, TurboTax customer support advised me to do this. I expect to receive refund next week. Let's see how it goes.

[shyam5]

Thanks and good luck!

[xj]

@sharpant how did you change 12b to $18500? During 'fix tax return' I was shown the form that seems to allow me to directly edit 12b but whatever I edit there is not saved.

[anthonytrieu]

@xj I was able to right click and override

[xj]

@anthonytrieu Ah, I think I am using the web version, which doesn't allow me to right click and override. I relealized the table that has this issue is "W2 - W2G summary", which isn't really filed to IRS, and there is option in 'tools' to delete this form. I was hoping by deleting this form I can force the system to skip the check, but, it just keeps putting the form back. Very frustrating.

[gigleb]

@TurboTaxRachelW I am having the same issue as @xj above, that I cannot fix field 12b using the web version. The form keeps ignoring the changes and flagging the field as "Needs Review". Help!