@tiffanym130 wrote:
I'm getting the same error message today when I enter my 1099-G. It would be great if someone with Turbotax could answer when they will have the software updated or when the IRS plans to provide instructions.
No one knows and the IRS isn't telling. It will probably be in Turbotax 1-2 weeks after the IRS releases the final form and instructions. (It has to be programmed, then reviewed and approved by the IRS.)
Regarding the original question, the tax you had withheld -- generally 20% -- is only the mandatory minimum withholding. Although the 10% penalty for early withdrawal is waived for covid-related distributions, you still owe the regular income tax on the distribution. The actual tax you owe is determined based on your overall income, deductions, and credits, and can be 15%-36% federal and 3%-13% state, depending on where you live and your total income. You get credit for the amount withheld, and if you owe more you need to make another payment, if you owe less you get a refund of the excess withholding.
