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New Member
posted Apr 14, 2022 6:56:11 PM

Why does my federal refund lower dramatically when I enter my 401k contribution from last year under "Deductions

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1 Replies
Expert Alumni
Apr 14, 2022 7:15:41 PM

If you contributed to your 401(k) plan, the contribution is reported in Box 12 with code D on your W-2 form. That amount is not included in Box 1 taxable wages. So you don't take a deduction again. Remove the entries, your federal refund will go back up.

 

If you want to put some money into your traditional IRA account and if you qualify for a deduction, it can lower your taxes. But you have to do it before 4/18/2022. The maximum you can contribute is $6000 or $7000 for taxpayers who are age 50 or over.