@Realninja24 wrote:
There is certainly something off with this. I split my cares act 401k withdrawal in 3. TurboTax is trying to tax me for the 3rd I input this year. This is not supposed to be taxable income.
Why would you think it is not taxable income?
When you decided to have the 2020 distribution spread over three years, 1/3 of the taxable amount of the distribution was entered on your 2020 tax return. On the 2021 tax return 1/3 of the taxable amount of the 2020 distribution is entered on your tax return as ordinary income and taxed at your current tax rate.
All of the federal taxes withheld from the 2020 distribution were entered on the 2020 tax return as a tax payment. The taxes withheld were included in the 2020 federal tax return you received.
The federal taxes withheld from the 2020 distribution cannot be spread over 3 years, only the distribution.
