Retirement tax questions

Per our expert DanaB27, you will have to add the excess deferral for 2022 to your wages with these steps:

1. Login to your TurboTax Account 
2. Click "Wages & Income" (under Federal) on 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 "2022 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

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 with the steps above 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.

Please see Pub 525 for additional information.

Excess contributions must be included as income for the year in which the contributions were made. If the excess contributions haven't already been claimed in that year, the return will need to be amended to include the excess distribution as income.

TurboTax will calculate your MAGI and determine whether you've made an excess contribution. If this happens, you'll be subject to a 6% tax penalty on the excess amount for every year that it stays in the account.