Took a 401k loan to buy my house in 2001 and in 2007 I defaulted on the loan. Filed for bankruptcy Sept. 2008. When I did my taxes for 2007 I paid $$ to IRS because of this. When I was doing my 2008 taxes, Turbo Tax asked is I'd had any distributions in previous years. I said yes, in 2007. Before I answered this question I had $$ being refunded to me; after I entered the default amount, I owed $$ to the IRS - why?? I've already paid the IRS; why does it seem I will have to pay again this year? Thank you very much.

Did you use TT for your 2007 taxes? If you are sure you paid the taxes and penalties on your 401K withdrawal and did not get a 1099 then go back and tell TT No instead of Yes.