Retirement tax questions

You will have to include the excess contribution to your wages on your Form 1040, using the instructions below.  

Since you did not get the excess distributed to you by 4/15/2021, you will end up paying taxes on the amount twice: First on your 2020 Tax Return and then again when you withdraw the money during retirement.  

Please follow the steps below:

1. Login to your TurboTax Account 
2. Click "Federal" from the left side of your screen
3. Scroll  down to "Less Common Income" and click "Show More"
4. Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
5. Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start"
6. On the "Did you receive any other wages?" screen answer "Yes" and click "Continue"
7. Continue until you get to the "Any other earned income" screen, answer "Yes" and click "Continue"
8. On the "Enter Source of Other Earned income" screen select "Other" and click "Continue"
9. On the "Any Other Earned Income" screen enter "2020 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

Please note for the Tax Year 2021 tax filing due April 15, 2022: 

• The earnings on Form 1099-R with Code 8 in box 7 should be reported on your 2021 tax return.
• Form 1099-R for a 2020 excess deferral distribution should have code P in box 7. If you didn't add the excess deferral amount to your wages on your 2020 tax return, you must file an amended return on Form 1040-X. If you didn't receive the distribution by April 15, 2021, you must also add it to your wages on your 2021 tax return.

Please see Pub 525 page 10 and 11 for additional information.