Yes, if this is a pre tax deferred plan or traditional IRA, when the excess is removed you will be taxed on the amount removed because it was basically deducted from taxes on your paycheck. So, when entering it, your federal due is supposed to go up, or your refund down, due to the contributions being counted as pretax dollars before the excess was recognized. When you now say they are not pre tax dollars you will see the tax appear; or when you say its not contributed to a tax advantaged plan or retirement account. Also, to avoid an additional 6% penalty you did right by removing the contribution and interest or earnings.
@taxpayer211
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