401k distribution / IRA contribution

[dawnd74]

In July 2019 I was laid off by my employer. I had a 401k I contributed to from Jan-July. In Dec 2019 I rolled funds to an IRA, but I had to pay off the existing 401k loan of $22,000. I was aware that I would have to pay taxes ok this as it is considered a distribution and added to my income (even though it all went to payoff my 401k loan). As I was entering all my info in Turbo tax, it told me I was getting a refund of $6600, then when I entered $22,000 for 401k distribution it changed to owing $995 Federal & $880 state. Why does it change so drastically? I would have thought my refund would cover the taxes I owed? Is there a way to help lower this amount and/or get a tax deduction for contributions I make to my existing IRA to help offset the amount I owe? I tried entering but I think my income is too high to get a deduction (is this new for 2019)?

[ColeenD3]

Unfortunately, because you were unable to rollover the entire amount, whatever money kept apart is taxable, regardless of why you did not roll it over. Had you defaulted on the loan, again that amount would have been taxable. 

 Please see the links below. The second is Deduction Limits for IRA.

There are other penalty exceptions, but nothing against the tax itself.

Exceptions

Deduction limits