401k Early Withdrawal 2020

[PattiF]

The IRS will be releasing Form 8915-E to use with the 1099-R. Here is more information:

CARES Act and 1099-R Withdrawal.

The software has not been updated yet because the form has not been finalized by the IRS. Once the software has been updated, you will be prompted through the form with instructions on how to enter the information.

The IRS has not provided a release date for the form at this time. Use this link IRS Form Availability to watch for when the 8915-E form will be available in the software once the IRS completes it.

[nbrownrep]

The form i filled out said the minimum income tax was 10% which i opted to take out. I paid 10% income taxes but Turbo is saying I owe 7k in federal taxes. How if i paid taxes on it. 

[dmertz]

The 10% was tax withholding on the distribution, not the tax liability you incurred by taking the distribution.  The the effect that the distribution has on your tax liability is not determined until you prepare your tax return because it depends on how much other taxable income you have on your tax return. Tax withholding is simply a prepayment toward the overall tax liability determined on your tax return.  The tax withholding is credited on your tax return toward that tax liability.

If your distribution qualified as a coronavirus-related distribution, TurboTax is not yet able to fully calculate your 2020 tax liability because Form 8915-E for reporting this distribution is not yet available.  You'll need to wait for this form to be implemented in TurboTax.

[llr5567]

I am also interested in the reply. I noticed the program asked about a disaster before 2/2020. Form 8915-e is only for Covid distributions and I believe the only eligible disaster for 2020. 

[KathrynG3]

Yes, you are correct regarding Form 8915-E, Qualified 2020 Disaster Retirement Plan Distributions and Repayments (Use for Coronavir... which pertains specifically to withdrawing a disaster distribution from an eligible retirement plan in 2020 before December 31. The declaration allows the distribution to be included in equal amounts over 3 years, instead of one.

However, there were other disasters declared, as well. While these other disasters do not qualify as a disaster distribution, there would be other tax relief, such as extra time to file. To see if your area was included, click the link for Tax Relief in Disaster Situations and scroll to 2020. 

@llr5567

[dmertz]

The Further Consolidated Appropriations Act, 2020 that became law on December 20, 2020 defined other 2020 disasters that qualify for disaster distributions.  These others will presumably be reportable on your 2020 tax return with the next Form 8915 in the sequence, which my guess will be a yet-to-be announced Form 8915-F.  Don't expect any new form for these distributions to be available in 2020 TurboTax before the regular filing deadline for 2020 tax returns.

[s_hawe]

When will the form be ready for the people who took out of our 401k and elected for the 3 year?

[JillS56]

Form 8915-F should be ready on or about March 31, 2022.   See TurboTax Forms Availability