excess 401(k) contribution & W-2

In order to electronically file both my MA state and federal

2006 tax returns with TaxAct, I had to add my refund of excess 2006 401(k) contribution (from failed ADP test) to box 1 and box 16 of my electronic W-2 in TaxAct. This was necessary to report the excess as wages without over riding fields that would prevent electronic filing. When the IRS receives my 2007 1099-R with code P (indicating taxable in 2006), I expect they may check my 2006 tax return to see if I paid tax on the excess contribution in 2006. How will they be able to tell? Will they have a copy of my W-2 from my employer (or from the SSA) to compare to the electronic W-2 that was sent with my 2006 tax return?
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Paul
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Yes they will, and that's how they can tell.

-- Phil Marti Clarksburg, MD

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Phil Marti

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