Correcting an IRA basis after repayment of a 2020 Covid Distribution

[bbolsm82]

I took out a Covid distribution from my traditional IRA at the end of 2020 (28 Dec 2020) and elected to divide the tax liability over tax years 2020, 2021, and 2022. I paid back 100% of this distribution on14 Dec 2022 and am now amending my 2020 and 2021 returns to indicate the repayment and recoup the taxes paid. My IRA had a basis at the time of the distribution, so some of the distribution was non-taxable. I can’t seem to find any location in the Turbo Tax software that enables me to reflect the re-payment of the basis such that I arrive at an accurate amount for what should be the correct new basis after the amendment is completed.  I’ve been trying to utilize the IRA Information Worksheet, Part III, Traditional IRA Basis Detail (in TurboTax2020), but can’t seem to get the software to compute the correct new basis (which should be my pre-2020 basis plus the 1/3 of the basis that was distributed in 2020). Please help me find the correct way to get the basis re-credited. Thx, -B

[AmyC]

The 8606 is what must be correct and filed with the IRS. For the 1040x, you only need to enter the amount of income change. For example: In 2020, $25,000 was taxable and the rest was basis. Then the amended would show only $25,000 subtracted from income - the actual income amount you were taxed on due to your basis.

Use the desktop software. The 1040x is a very straightforward form. I would keep it simple and override both the income and the 8606 in Forms mode for each year. You will want to file the corrected 8606 for each year. 

[fanfare]

"am now amending my 2020 and 2021 returns to indicate the repayment and recoup the taxes paid. "

You timely paid the distribution back, but you are just now amending to report that ??

Consult the sections on "amending" in the 2020, 2021, 2023 instructions for Form  8915.

It is no fun.

Note:  you can amend to restore the correct "prior years basis" but you have missed the deadline

for amending a 2020 tax return for refund.

FYI : Caution: When Form 8606 prior years basis was involved, TurboTax 2020 did not produce the correct taxable amount in certain situations (namely, my situation) .

Note also that when Form 8915 is filed (or amended) ,the worksheets for Form 8915 are also to be attached.

@bbolsm82