1) You should not manually change the amount on your W2. Instead of entering the excess deferral using the Form 1099-R, you can use the instructions below. As long as there is no federal or state tax withholding reported on the 1099-R, you can delete it. The problem is, code "P" indicates that the distribution is taxable in the prior year, so that indicates to TurboTax that it is 2016 income rather than 2017.
Once you begin the Amendment process in TurboTax, please follow these instructions to report your excess 401(k) deferral:
- 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 "Yes" to the Question "Did you receive any other wages?"
- Click "Continue" through the questions until you get to the section "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 "2018 Excess 401K Deferrals" and click on Done
2) You are correct, the only income you need to report on your 2018 Tax Return regarding this return of excess contribution is the earnings reported to you on Form 1099-R with Code 8.
