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If your W-2s over the years showed your NJ Wages and Federal Wages were the same in the years you contributed to the 401k, it means you have no basis to recover because your contributions were "pre-tax". In this case, you simply report the distribution as fully taxable in NJ.    Here is how to verify:   Check Box 2a (Taxable amount) on your Form 1099-R. If it matches Box 1 (Gross distribution), NJ will typically see the entire distribution as taxable Check Box 9b (Total employee contributions). If there is an amount there, it represents "after-tax" money you already paid taxes on. This is your basis* Check Box 5 (Current calendar year non-taxable amount). Sometimes after-tax contributions are noted here   *If you know you made after-tax contributions, but can only find 10 years of records, you can use that amount as your basis. The IRS and NJ allow for "reasonable estimates" if records are not available.   If in doubt, using zero (0) as your basis is the safest default to avoid underpaying NJ.

@JamesG1, Thank you so much for the answer. I really appreciate it!    I followed your steps to add the amount paid back to my former employer. I have quick follow-up questions:     In TurboTax, how do I provide proof to the IRS that the specified amount has been repaid to the employer, and what proof do I need to provide to the IRS for it? TurboTax Online did not ask me any questions about the proof of the payment. What do I do if the IRS later asks for it, and will I get penalized?   Thanks!  

Remove the Q from your return. IRS Publication 970, Tax Benefits for Education states that nontaxable distributions should not be entered. It is not taxed at the federal or state level and should not be entered. I am glad you found the credit. Welcome to AL!

Make sure that you are in the correct site before you download anything or enter your card information.  To download the program go to InstallTurboTax.com   Select your product Select your operating system Locate and select your Download file to start the installation process Accept the TurboTax License Agreement Your product should automatically install after accepting the license agreement After you download it, follow the instructions to get your program activated.  Use the license code from your package.   How do I get started with TurboTax Desktop?   @user17749747428 

Wash sale adjustments are provided by your broker on your consolidated 1099-B automatically as required by IRS. There is nothing to do on your state tax return. There is nothing to do on your federal return, unless two different brokers are involved with your transactions on the same security. @ed128