Since you are unable to have the excess 401(K) contribution of $350 distributed, you will be taxed on this amount twice. Once on your 2018 Tax Return and then again when you withdraw the funds in the future. Check out IRS Pub 525 for more details: https://www.irs.gov/pub/irs-pdf/p525.pdf.
You need to report the excess contributions on Line 1 of your 2018 Tax Return by following these steps in TurboTax Online:
- Login to your TurboTax Online Account
- Click "Take Me to My Return"
- Click "Federal" from the left side of your screen
- Scroll down to "Less Common Income" and click "Show More"
- Select "Miscellaneous Income" and click Start or Update
- Select "Other income not already reported on a Form W-2 or Form 1099" and click on Start
- Answer the Question "Did you receive any other wages? Yes
- Click "Continue" through the questions until you get to "Any Other Earned Income"
- Answer "Yes" to "Did you earn any other wages?
- Indicate "Other" as Source of Other Earned Income and click Continue
- For the description enter "2018 Excess 401K Deferrals" and click on Done
NOTE: There is currently an e-filing issue within TurboTax related to excess contributions so you will need to mail in your return. You can check out this TurboTax FAQ for more information: Excess 401(k) Contribution Preventing E-filing.
