COVID-19 401K early withdraw California State Tax

Forum|Forum|5 years ago
March 1, 2021
3 replies
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I took an early 401K distribution under cares act for COVID-19 and filled out form 8915 for the federal portion in turbotax. I took a 1/3 approach on how to spread the taxes.

Do I need to fill out something for California state tax? Where would that be and what form would I need to fill out for state

DanaB27

Level 15

California follows the federal rules in regards of the 10% penalty and the 3 year split when receiving a COVID retirement distribution.

[Edited 3/31/2021 | 10:58am PST]

@turbota888

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turbota888Author

Level 2

Can you confirm if California also follows the federal rules of allowing the distribution to be split over 3 years?

I couldn't find anything in writing specifying this, so just wanted to make sure.

DanaB27

Level 15

California follows the the 10% penalty waiver and allows the distribution to be split over 3 years.

Edit [3/31/2021 | 10:58am PST]

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Fajita387

Level 2

So if I took $24,000 from my retirement under the COVID provisions and on my federal I split it over 3 years, so $8,000 each year then CA is the same? I leave the adjustments window blank and this year and the next 2 years the $8,000 will automatically flow over from when I fill out my federal taxes?

I just don’t want to do this wrong. Thanks.

DanaB27

Level 15

Yes, CA follows the federal treatment. If you split it for 3 years on the federal $8,000 per year, then it will get carried on the CA state return.

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PatTax

Level 2

Ok so here’s an interesting twist for you all:

I failed to report my 401k withdrawal at all upon originally filing my 2020 returns (long story), so I recently got a letter from the IRS and subsequently used turbo tax to refile both my fed and state (CA) returns (each accompanied by a lovely bank cheque of course, ugh).

Today I received a REFUND from CA tax board of the exact amount I’d sent with my state re-file.

This seems to indicate perhaps I don’t owe state tax on the early withdrawal at all - only federal?

Surely that can’t be right, but I’ve never known CA FTB to ever make a mistake.

Any experts here have thoughts on that?