How to report 401K overpayment when employer returned overpayment amount minus taxes?

[tmstms4]

Hi my employer returned 401K year 2021 overpayment amount  to me as a check dated 03/15/2022 with federal and state taxes already taken out (e.g. $900-$90 federal-$10state=$800 check amount). I have received 1099R this year with code 8 in box 7. How do I report this on my 2022 tax return so that I do no pay taxes already taken by my employer again? Thanks!

[DanaB27]

If this excess deferral was listed on your W-2 box 12 then it was excluded from your wages in box 1 and will have to be added to your wages in 2021. The 2022 Form 1099-R with code 8 will report the earnings and will have to be entered on your 2022 return.

The withheld taxes will be applied to your 2022 tax return.

Please see Pub 525 for additional information.

[Edited 4/17/2023 | 11:08 am PST]

@tmstms4 

[tmstms4]

Hi thank you for the info. I do not have it in box 12 of W2. Category D has correct IRS allowed amount. The check that I got from my employer on 3/15/2022 has info on taxes withheld from over contribution so the check amount is after taxes. Do I still need to add overpayment amount to my wages or am I OK since taxes have already been payed on over payment amount before the tax date?

[DanaB27]

Yes, you will have to enter this Form 1099-R code 8 on your 2022 tax return since these seem to be the earnings that have to be reported on your 2022 tax return.

[tmstms4]

make sense, thank you for your help!