dmertz
Level 15

Retirement tax questions

As you rightly pointed out, only $200 of this distribution is taxable, not $2,200.  You could try to get the solo 401(k) trustee to correct the Form 1099-R to show only $200 as the taxable amount, but they are unlikely to do so because they likely do not know the structure of your company whether you take a self-employed retirement contribution or are paid on a W-2 and will just keep the Form 1099-R as is by assuming that you are paid on a W-2.  This standardizes the way that they report this type of distribution.

 

That leaves you with two options.  You can prepare a substitute From 1099-R (Form 4852) showing only $200 in box 2a, giving you the opportunity to provide a detailed explanation as to why only $200 is taxable.  However, preparing Form 4852 will require that you paper-file.  Alternatively, you could enter negative $2,000 as an item of Other Income.  This provides little space to provide an explanation, but it allows you to e-file.