In 2014 wife cashed out her 401K. Failed to pay taxes at the time. In 2016 we were notified by the IRS of our need to pay the back taxes and we did along with the fine.

[depealerco]

At the time State taxes were taken out but not Federal. So we paid the tax debt and fine. Do I need to show that somewhere on my 2016 forms.

[Opus 17 · Accepted solution]

If you paid state tax in 2016, you can include that as an itemized deduction along with other state taxes that might have been withheld from your pay.  Enter on the deductions and credits page under "estimates and other taxes paid."

If you are otherwise caught up with the IRS, there is nothing else you need to do.