A 401k loan won't be reflected on a W-2 at all.

While his 401k loan payments show as a deduction to pay on his pay check stubs, the portion of his pay that is repaying the loan with itself is taxable and included on his W-2. Loan repayments are not tax differed like contributions to his 401k are.

Have him better describe what he believes the discrepancy may be and we may be able to give you a better answer than simply conjecturing what the issue may be.

The only thing I know is that he said there is something different on his W-2 this yr and I know he took that out and the fact that the loan is taxable is the only thing I could think of when he mentioned it to me. I think it is just a way to try and get me to split filing cost with him. He just wants to try to make it so someone else does the taxes for us instead of me.

The loan itself isn't taxable, it's just that the repayments aren't tax deferred like a contribution would be.

If he's gotten a 1099 for the "loan", he didn't take a loan, he took a withdrawal and would owe tax plus a penalty. Are you sure he took out a loan and didn't simply withdraw the money?

The loan isn't taxable, but is getting repaid with after-tax money taken from his paychecks. That's one possible change.

The federal income tax withholding tables changed this year, with the expiration of the Making Work Pay Credit. This would tend to make one's net income go down.

To offset the income tax change, the Social Security tax withheld was decreased by 2% for employees. This would make net income go up a bit.