@ACas wrote:
I have a couple of questions:
How do I know that the 10% withheld for federal taxes in 2020 is accounted for? I don't think it was because TT since last year's return, is calculating based on exactly 1/3 of the gross amount. The amount withheld is on the 1099-R, however, I don't think TT is taking it into account. Would I have to amend my 2020 return?
My 8915-E has $100,000 listed under Part I column c, but my distribution was not over 100,000. Is this an error that is affecting the amount of taxes I owe? Line 5 is 0.
When you took the distribution in 2020 if you took the 10% withholding, then whomever holds your retirement account sent 90% of the distribution to you and 10% of the distribution to the Dept of the Treasury (in other words, the IRS).
ALL of that 10% withholding went against your 2020 taxes that you filed last year.
If you elected to spread the taxes out over 3 years, then ALL of the withholding went against only one-third of the tax liability, and that meant that in 2021 you got a bigger refund or sent them a smaller check than what would have happened if you hadn't taken the distribution and hadn't done the withholding.
BUT the flip side of that is that is that this year and next year, you will pay the taxes you owe on the remaining 2/3 of the distribution, and there is no withholding to cover it unless you have been sending extra withholding from a paycheck and/or estimated taxes.
The problem here is that the IRS has made a complete mess out of explaining how these distributions work, and then TurboTax has made an even BIGGER mess of it! Normally you can kinda figure out the underlying logic by the way that the questions get asked, but yikes! it's like whomever wrote the questions didn't understand how it works!
The most important thing that you need to do is to go find the 2020 8915-E that you filed last year. Look at Part II and Part III -- the only distinction here is which sort of account you took the money from, and there's no difference between the process after the first year.
If you filled out Part II, you need to look at lines 8, 9, 10, and the box in line 9. If the box in line 9 is checked, line 9 EQUALS line 8. If the box is not checked, the line 9 is 1/3 line 8.
If you filled out Part III, you need to look at lines 16, 17, 18, and the box in line 17. If the box in line 17 is checked, line 17 EQUALS line 16. If the box is not checked, the line 17 is 1/3 line 16.
If something is wrong, stop now because you are going to have to file an amended return for 2020!
Where the TurboTax instructions say
2020 Form 8915E, line 9, if you checked the box on that line, enter 0
Here are MY instructions:
On 2020 Form 8915E, line 9, there is a checkbox.
If the box is checked, the amount on line 9 equals the amount on line 8.
If the box is not checked, the amount on line 9 equals 1/3 the amount on line 8.
- If the box is checked and the amount on line 9 equals the amount on line 8, enter 0 in the amount-box on the right.
- If the box is not checked and the amount on line 9 equals 1/3 the amount on line 8, enter the amount on line 9 (which is 1/3 the amount on line 😎 in the amount-box on the right.
Here's the translation for "2020 Form 8915E, line 17, if you checked the box on that line, enter 0"
On 2020 Form 8915E, line 17, there is a checkbox.
If the box is checked, the amount on line 17 equals the amount on line 16.
If the box is not checked, the amount on line 17 equals 1/3 the amount on line 16.
- If the 2020 box is checked and the amount on line 17 equals the amount on line 16, enter 0 in the amount-box on the right.
- If the 2020 box is not checked and the amount on line 17 equals 1/3 the amount on line 16, enter the amount on line 17 (which is 1/3 the amount on line 16) in the amount-box on the right.
This would have been enormously simpler if TurboTax had asked you for whether you checked the boxes in 2020, and the amounts on lines 8, 9, 16, & 17 in 2020. Then it could have confirmed that the 2020 form was internally consistent, and filled in the 2021 form properly!
