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@Vickmorn wrote:
Which version of TurboTax are you all using to manage the CARES Act withdrawals? Deluxe or Premier?
All the TurboTax desktop editions include Form 8915-E with a software update on 02/26/2021. All of the TurboTax online editions have been updated to use the Form 8915-E.
I am using premier desktop which works now. hooray
What form do I fill out on my Wisconsin Taxes for this 401 withdrawal tax burden?
sorry. I do not know- I am in Florida- no state income taxes..moved here from New York
@k9208722637 There is no additional Wisconsin form needed. Wisconsin is accepting the 8915E. Click here for information on updates to 2020 Wisconsin Tax Law. The 8915-E will be used for penalty relief from early retirement plan distributions and include the option to spread the distribution income over 3 years. This may be a good option if the distribution is pushing you into a higher marginal tax bracket. You may end up paying less tax if you spread the distribution over the 3 years
Deluxe
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:
The coronavirus-related distribution allows for up to $100,000 to be withdrawn from a retirement account exempt from the 10 percent penalty tax.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.
I pulled $100k from my 401k using the cares act. Will I still receive the stimulus or will that make me ineligible?
Unfortunately, the answer would likely be yes, it could make you ineligible. A withdrawal that increased your income past the thresholds would make you ineligible. The IRS is using the adjusted gross income, which is $75,000 for an individual and $150,000 for a couple. If you do take a withdrawal out, it is considered a part of that adjusted gross income. This works against you, but by choosing the three year option, it's counting only the taxable amount.
If one third still puts you over the threshold, then you will not receive your stimulus.
Here is the most recent updated information for the third economic impact payment (EIP) stimulus payments. IRS EIP3 page
Great explanation. I payed all the taxes this year causing me to exceed the limit. Thank you!
I selected to do the Tax Burden on this year, but would like to change back to spreading it over 3 years? How do I do that?
If you have not already submitted your filing, go back in and edit that 1099-R, and it will take you through all of the options again, and you will be able to identify that you want to spread out over the 3 years (I think you "uncheck" the box). If you have already submitted your filing, I am not sure what you will need to do.
If you already filed you'll need to amend your return.
See this TurboTax FAQ for help with amending.
You can check the status of your amended return here, but allow 3 weeks after filing for it to show up.
So I chose this option in 2020, to spread the tax burden over 3 years. How will we report this properly in 2021's taxes?
@drlamb1 wrote:
So I chose this option in 2020, to spread the tax burden over 3 years. How will we report this properly in 2021's taxes?
Using the new 8915-F form that is still in the draft state at the IRS. Probable be a month of two before it is released.
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