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Posted by Bhoot Nath on April 5, 2008, 2:44 pm
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In 2007 I was deemed an HCE; as a result, about 6K of my 401K
contribution for 2006 was categorized as excess and retfunded (with a
small earnings). This was included in my 2006 tax calculations, and I
paid the extra federal and state taxes.
Now, I have received a 1099R for the tax year 2007, with distribution
code "P" -- which says "Excess contributions plus earnings / excess
deferral taxable in 2006". Both line 1 and 2a are listed as $6K. When
enter this in tax software, the amount automatically rolls to Form
1040 line 16a and 16b.
But this is not right! I already paid taxes on this in 2006, so I
should not have to pay taxes again on the 2007 return.
Since I received the 1099R, I must report it. I think it should go in
line 16a, but should be excluded from line 16b. But TaxACT is not
doing it this way... I have an optiobn to override, but I want to
understand it first.
How do I report the amount from 1099R (so I don't get nastygram from
IRS), but still avoid double taxation, since I already paid taxes in
2006? The code P's meaning is clear, but how to actually make that
happen?
Bhoot Nath
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