Loss on excess deferral

[Harry200]

Client with 2 jobs over-contributed to retirement plan(s).   When the excess was repaid back to her, the FMV had gone down so the amount paid to her was less than the excess distribution. Fidelity advised to report that difference as a LOSS under other income.  PTO won't allow a negative in that field. Is there another place to put it? 

Thanks! 

H Reiss

[sjrcpa]

Fidelity doesn't know what they are talking about.

EDIT: I'm the one that didn't know what they were talking about.

[rbynaker]

I don't know anything about PTO (or Lacerte) but according to the 1040 instructions (2022) pages 86-87:

Examples of income to report on
line 8z include the following:

Loss on certain corrective distribu-
tions of excess deferrals. See Retirement
Plan Contributions in Pub. 525.

Are you saying Schedule 1 Line 8z will not accept a negative entry?

[sjrcpa]

Thanks Rick. I did not know that. I probably cost a client a $25 deduction once or twice.

[rbynaker]

Does Lacerte allow a negative entry on S1L8z?  If so, I would guess that PTO does as well.  If not, that's a bug--er, "unexpected behavior?"--that may need to be reported.

[Harry200]

Exactly right.  

[Harry200]

Sorry, ALL. Upon awakening and being somewhat refreshed I see that the issue was a New Jersey matter, the federal was fine. NJ, naturally, does not allow losses for the most part. I had to finagle with then NJ override screens to get this very close to right so that I could e-file.  Thanks for all your feedback and sorry, again. 

[rbynaker]

Thanks for posting back, that makes a whole lot more sense!