@DVE wrote:
I had an excess contribution in 2020. That's all sorted out with a check. I've seen the advice (in multiple places on these forums) for using Miscellaneous Income to report an excess contribution. However, TTax's checks and help, and the IRS publication, seem to indicate that I should create my own 1099-R with a code 8 for the excess contribution. As part of this, it creates a Form 4852, with reasons given why I didn't get a 1099-R (and it's because I'll only get one for the excess contribution in 2022 with a code P). Similar answers it seems for both line 9 and 10 on that form. Which is the actual correct way to do it? The latter seems to be the "official" way.
I did see a post earlier that indicated that creating your own 1099-R can lead to hassles next year...
Doing it your way is sure to lead to an IRS letter.
If it created a 4852 you did it wrong. You do NOT use a substitute 1099-R to do this. You just create a regular 1099-R and file it early. Since you have not received the 1099-R yet you have nothing to substitute for.
That is one reason that I prefer the Misc income method - there is less confusion and the both do EXACTLY the same thing - put the returned excess on the 1040 line 1 and nothing other then the 1040 is sent to the IRS.
Excess 401(k) deferrals should be reported in:
(There are several screens to click through to get to the right place)
Miscellionious Income ->
Other Income not reported on a W-2 ->
Other wages (yes) ->
House Hold employee (Continue) ->
Sick Pay (Continue) ->
Other earned income (yes) (Includes excess salary deferrals)->
Source of income (other) ->
Any other income - enter the amount of the excess deferral and an explanation.
This will add the returned excess to your 2020 wages on line 1 exactly the same way that the 1099-R would. The only information that is sent to the IRS is the line 1 amount.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
