There are two ways you can report this on your 2021 return.
You can report the amount of the Excess Contributions under Miscellaneous Income as follows:
- Click "Federal" from the left side of your screen
- Scroll down to "Less Common Income" and click "Show More"
- 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 the Question "Did you receive any other wages? Yes
- Click "Continue" through the questions until you get to "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 "2021 Excess 401K Deferrals" and click on Done
If you report the Excess Contributions in this way, when you receive a 2022 Form 1099-R from the plan administrator (which you may not get before tax filing deadline), you won't need to go back and amend your 2021 return; just keep it for your records.
OR, not do anything with the Excess Contributions on your 2021 return; you will be charged a penalty. Then, when you receive the 2022 Form 1099-R, you would need to Amend your 2021 return.
The amounts your employer contributed that were forfeited would have been returned to them.
Click this link for more detailed info on How to Report Excess 401K Contributions in TurboTax (change the years to 2021 and 2022).
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