- Go to Wages & Income -> Less Common Income -> Miscellaneous Income, 1099-A, 1099-C.
- Click Other income not already reported on a Form W-2 or Form 1099.
- Answer Yes, you received other wages.
- Proceed to the Any Other Earned Income page and answer Yes.
- click past next 2 screens till you reach the excess salary deferral screen
- Did you earn any other wages answer YES
- Choose "OTHER"
- "Excess 401k salary deferral" in the description and enter the amount including earnings that were withdrawn
TurboTax will include the amount as wages on your tax return.
This is because in 2018 you will receive a updated earnings statement or 1099 dated for 2017 and would have to amend your return to process the excess payment. Now you won't have to amend the return and all the money was reported as income that otherwise is currently considered deferred... Note , your state may not allow 401k deferred income so if your state does not, you may have to adjust this out as otherwise you would be recording the income twice if your state does not allow 401k pretax benefits.
The earnings or losses will be reported in the year of the withdrawal which most don't notice till a year lag. This is because we are cash basis taxpayers.
I hope this was helpful?
**I don't work for TT. Just trying to help. All the best.
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