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Retirement tax questions
No additional form needed; however, TurboTax has not resolved the issue they are having with the Wisconsin penalty on 401k withdrawls under Cares Act. The desktop version is still providing an error regarding this, and not allowing anyone to file Wisconsin taxes.
On April 15, 2020, Gov. Evers signed into law 2019 Wisconsin Act 185 (Act 185), providing COVID-19 relief for the State of Wisconsin. Act 185 provides several important changes to the State Income and Franchise Tax and the Property Tax.
Income/Franchise Tax Provisions
Act 185 adopts a number of changes to conform Wisconsin’s income and franchise tax laws to changes enacted by Congress and President Trump in March 2020, to the Internal Revenue Code (IRC) in response to COVID-19. The changes are detailed below:
- Retirement Accounts – The CARES Act provided several changes for retirement accounts including suspending required minimum distributions, increasing 401(k) loan limitations, and creating a coronavirus-related distribution.
The coronavirus-related distribution allows for up to $100,000 to be withdrawn from a retirement account exempt from the 10 percent penalty tax. To qualify, the individual or their spouse must have been diagnosed with COVID-19 or experienced adverse financial consequences caused by COVID-19. Any amount of the distribution that is taxable can be recognized over the next three years or the taxpayer can elect to treat the distribution as taxable in 2020.
For Wisconsin income tax purposes, otherwise applicable penalties on distributions from a retirement account qualified under the IRC will be waived for tax year 2020. In addition, for Wisconsin income tax, these distributions, subject to a number of conditions, will be exempt from tax.