@DanaB27 wrote:
You can just report with the steps mentioned above by Tax Expert MinhT1.
If you receive the distribution of the excess deferral and earnings by April 15th then please note for the Tax Year 2023 tax filing due April 15, 2024:
- 2023 Form 1099-R with code P in box 7 can be ignored if you reported the excess as described above in 2022.
- The earnings on 2023 Form 1099-R with Code 8 in box 7 should be reported in 2023.
Please be aware, if you do not take out the excess amount by April 15th, then you are taxed twice on the excess deferral left in the plan. This happens once when you contribute it and again when you receive it as a distribution. You can't include the excess amount in the cost of the contract even though you included it in your income.
@Wolf43
If I understand that correctly, to be taxed twice will only happen when I've entered and already filed to IRS of the excess amount in Turbotax for tax year (2022) with "2022 Excess 401(k) Deferrals" under the "Any Other Earned Income" section, but the excess amount is removed after April 18th (actual deadline) ?
What's the solution for that ? Does that mean we have to amend the tax return ?
What if I filed a tax extension which is good until Oct 15th and I plan to file the 2022 tax to IRS until my 401k over contribution is corrected even if that's fixed after April 18th, do I still pay twice tax ?
