2020 IRA distribution, 2020 return was never filed... file original and amend or file with repaid IRA as is

[Nata2024]

I hope it makes sense. I am helping a friend. I have professional tax prep experience from the past (before 2010). however, 2020 is special year to say it lightly. 

My friend never filed his 2020 return, took large IRA distribution, repaid it in 2022. 

MY QUESTION: does my friend need to file 2020 as if he was filing on time back in 2021 and amend it right away OR somehow 2020 can be filed (remember, never filed 2020) with repayment? 

[xmasbaby0]

The first bad news is that you cannot use TurboTax for a 2020 return.  The software for 2020 is no longer available, is not supported, nor would it updated even if you can find it on eBay, etc.   So --sorry.    

It is also too late to receive a refund for a 2020 return---any 2020 refund has already been forfeited.   But any tax due is still owed, and is owed with late filing penalties and interest.

And ...you do not amend a return that has not already been successfully filed and fully processed, so not sure why you are asking to amend a return that was never filed in the first place.

Your friend might want to seek a local paid tax professional to help with this.

[dmertz]

This sounds like it was a COVID-Related Distribution.   This was required to have been originally reported on 2020 Form 8915-E.  By choosing to not split the income over 3 years on that form, amending the 2020 Form 8915-E would have been required to show the repayment, eliminating the distribution from 2020 taxable income.

If this is the case, the net change to 2020 is zero (assuming that there was no other reason that a 2020 tax return needed to be filed) and it might be easier to just deal with it if the IRS ever questions the reporting of this distribution and the repayment.  To corroborate the repayment of a CRD there should be a 2022 Form 5498 that reports the repayment amount in box 14a with code DD in box 14b.  Alternatively, it would probably make sense to just file a 2020 tax return that includes a Form 8915-E that shows the entire repayment on line 18 despite the repayment having happened in 2022 and include an explanation statement.

[Opus 17]

Note that the IRS statute of limitations is 3 years from the filing deadline, or 6 years in case of fraud or an understatement of tax by more than 25%.  Your last incorrect tax return was 2022, which was due April 18, 2023.  So you should save documents proving your withdrawal, and your repayment, until at least April 18, 2029, in case of audit.