I took $30k from my 401K in a panic in May 2020 due to cash flow issue caused by COVID, but paid it back in December 2020 in the same plan (rollover back into the same account).
I included the 1099 form from Fidelity and checked the "withdraw due to COVID-19" in Turbo tax when I filed for Yr2020, and the software generated "non-taxable" income result for this withdrawal automatically.
Now in Yr 2022 I just got an IRS letter stating I have to pay an income tax of $14k(!!!) with penalty due to this. How should I reply to IRS, any suggestions???
