1099r, I took a hardship loan from my 401k, paid taxes on it . 25000 loan paid 7500 taxes at the time, netted 17000 on the loan and now i have to pay an additional 2500 taxes on it?

[bwa]

I'm assuming this was a distribution, not a loan, as a loan is not taxable income.

Your situation is possible.  The $7,500 wasn't payment of tax, but just a prepayment such as withholding on your wages.  It may be more or less than the actual tax liability.  As an example, if you're in the 25% tax bracket and don't meet the IRS definition of hardship (which isn't the same as the plans) you would be subject to a total of 35% tax on the distribution.