Has anyone seen guidance on what counts as paying back the Cares Act 401k withdrawal.
For Example lets say I took out 40k for the cares act from my 401k in 2020.
I want to pay it back now but I also have 10k in 401k loans (Pre CARES Withdrawal). Can I just pay back 30k and pay off my 10k 401k loan? Does that qualify as paying all 40k back? I have not filed my 2020 tax form yet.
Paying a loan is specifically excluded as a payback. A payback must go onto a qualified retirement plan.
No, paying back your 401k loan doesn't count towards paying back the CARES 401k withdrawal.
Thanks, do you know if normal 401k contributions count toward repayment?
No, normal 401k contributions would not count toward the repayment since contributions are coming out of your pre-tax wages and are reducing your tax.
What happens if I file return claiming I will repay 1/3 by filing deadline but do not come up with $ to repay till month or 2 after?
@Caseyblue wrote:
What happens if I file return claiming I will repay 1/3 by filing deadline but do not come up with $ to repay till month or 2 after?
The IRS "can" bill you for interest from the filing date to the payment date. It is not clear if they will do that or not.
If you file form 4868 now, you can have until Oct 15 to pay back for 2020.
OTHERWISE,
Don't miss the deadline. You would have to amend your tax return.
What if I have already filed & received refund?
Can I still file form 4868 re. Cares Act repayment?
@Caseyblue wrote:
What if I have already filed & received refund?
Can I still file form 4868 re. Cares Act repayment?
A 4868 is an extension to file that you do not need since you already filed.
You do not have until the filing deadline to repay the 2020 1/3 if you chose to pay over 3 years (it is calendar years). Any repayment made in 2021 counts toward the 2021 1/3 of the tax. The option to spread it over 3 years must be made on your 2020 tax return with a 8915-E form.
If you did not do that any you want to pay 1/3 in 2020 and spread the other 2/3's over 2021 and 2022 you can submit an amended 2020 return.
This person does need to file Form 4868 since they need more time to pay back for 2020 as indicated in the filed tax return.
A timely filed tax return is the same thing as a 4868.
But AFAIK a 2020 repayment had to be made before Dec 31, 2020 - where do you see that it can be extended?
AFAIK the extended due date only applies to repayment of an outstanding loan offsets due to leaving employment (the 1099-R should have a code M).
Please refer to Instructions for Form 8915-E.
"A timely filed tax return is the same thing as a 4868."
I already filed, so now all my deadlines marked (including extensions) are available to me?
That makes no sense.
@fanfare wrote:
Please refer to Instructions for Form 8915-E.
"A timely filed tax return is the same thing as a 4868."
So now all my deadlines marked (including extensions) are available to me?
That makes no sense.
Not if you elect to pay over 3 years.
The instructions say:
Enter on line 10 the amount of any repayments you made before filing your 2020 return. Do not include any repayments made later than the due date (including extensions) for that return nor any repayments of nontaxable amounts. If you elected to spread the income over 3 years and you repaid more than the amount on line 9, the excess will be carried forward to your 2021 tax return. Repayments made after the due date of your 2020 return (including extensions) but before the due date of your 2021 return (including extensions) will generally be reported on your 2021 tax return if you elected to spread the income over 3 years.
So you can pay back up to the line 9 amount up to Oct 15.
A 4868 is an extension to file. It is irrelevant if you filed on time.
So if I already filed & received refund, I have until Oct 15 to actually make my 1/3 repayment & do do need to file form 4868 for an extension ?
@fanfare wrote:
This person does need to file Form 4868 since they need more time to pay back for 2020 as indicated in the filed tax return.
See:
26 CFR § 301.9100-2 - Automatic extensions
(b) Automatic 6-month extension. An automatic extension of 6 months from the due date of a return excluding extensions is granted to make regulatory or statutory elections whose due dates are the due date of the return or the due date of the return including extensions provided the taxpayer timely filed its return for the year the election should have been made and the taxpayer takes corrective action as defined in paragraph (c) of this section within that 6-month extension period.
Not sure I understand.
So if I already filed & received refund, I have until Oct 15 to actually make my 1/3 repayment & do not need to file form 4868 for an extension ?
@Caseyblue wrote:
Not sure I understand.
So if I already filed & received refund, I have until Oct 15 to actually make my 1/3 repayment & do not need to file form 4868 for an extension ?
No. If you files then the extension to Oct 15 to make the repayment for 2020 is automatic as long as it is made before Oct 15 and you amend by then.
What would I amend?
When I filed, I indicated that I would be making the 1/3 repayment
If you already claimed that you repaid it then all you need to do is actually make the repayment. Nothing else is necessary.
(When you said that you did not pay it, I assumed that you had not already claimed that you did.)
ok @macuser_22
BUT
"So you can pay back up to the line 9 amount up to Oct 15."
You can pay back any amount up to Oct 15, that amount goes on Line 10.
It could be one third, two thirds, all or any other other amount.
(if you paid back all, there would be no point splitting it in three).
This filer must pay back the amount filed on line 10, or line 18 for IRAs, exactly.
Otherwise, he'd have to amend to file the new different amount.