Hello,
Back in April 2020, I made withdrawal from my personal 401K account from TD Ameritrade - "COVID 19 distribution." It was from qualifying 401K account and I had qualifying COVID-19 related hardship. My situation has changed and, in January 2021, I decided to pay back the distribution to my 401K account at TD Ameritrade. CARES Act allows people to pay back "COVID 19 distribution" within 3 years so they do not have to pay taxes or simply get refund for paid taxes. I guess it basically extends regular 60 day rollover period to 3 years. That is my understanding. Since I took distribution, TD Ameritrade sent me 1099R Form. I recorded that distribution in Turbotax. My question is where do I record repayment of that distribution in Turbotax? When I go to rollover section, Turbotax discusses only 60 day rollover. It does not have any information on COVID-19 CARES Act 401K 3 year rollover period. It is a bit surprising. Thank you for your help,
Matt
The IRS has not released the forms yet for this. At this point in time the Form 8915-E (Qualified 2020 Disaster Retirement
Plan Distributions and Repayments (Use for Coronavirus-Related Distributions)) is not finalized.
We currently do not have an estimated date when the form is ready.
Please sign-up here and we will email you once the form is live.
The IRS has not released the forms yet for this. At this point in time the Form 8915-E (Qualified 2020 Disaster Retirement
Plan Distributions and Repayments (Use for Coronavirus-Related Distributions)) is not finalized.
We currently do not have an estimated date when the form is ready.
Please sign-up here and we will email you once the form is live.
I see, thank you very much for a quick reply and help. I really appreciate that! Have a good evening.
Matt
The IRS has issued Revised Form 8915-E 2020 as of 12 Feb 2021. When will this update be active on Turbotax?
Hi, I purchased the dowload software for mac, home and business and I became quite frustrated to learn that it does not calculate my taxes properly according to the CARES Act hardship withdrawal of 401K. I had qualifying hardships in 2020 and withdrew 401k funds, this was supposed to be without the early withdrawal penalty and income tax distributed into 3 years. None of this is reflected in turbotax software and there are no questions related to it either, and it is calculating an outrages tax that I owe as a result. When will this be updated?
The TurboTax 8915-E should be available on Feb. 25 (pending IRS approval by then). Updates are usually at night so check on the 26th.
See the forms availability list:
https://ttlc.intuit.com/community/forms/help/irs-forms-availability-table-for-turbotax-individual-personal-tax-products/00/26224
The IRS just finalized the form on Feb 11. TurboTax must now submit their 8915-E software to the IRS for testing to be sure that both TurboTax and the IRS e-file computer are compatible. That process usually takes the IRS 2-3 weeks for approval to release the new form to the public.
See below for a link to sign up for an email when the form is ready.
This form is necessary to report COVID related distributions from IRA's and other retirement plans to report the distribution, pay it back over 3 years or spread the tax over 3 years.
A COVID-19 related distribution is reported on a new 8915-E form.
See this TurboTax FAQ to sign up for an e-mail when the form is ready.
https://ttlc.intuit.com/community/tax-topics/help/why-am-i-getting-getting-a-10-penalty-on-my-1099-r-when-i-withdrew-fund-during-covid-form-8915-e/01/1842324
The TurboTax 8915-E should be available on Feb. 25 (pending IRS approval by then). Updates are usually at night so check on the 26th.
See the forms availability list:
https://ttlc.intuit.com/community/forms/help/irs-forms-availability-table-for-turbotax-individual-personal-tax-products/00/26224
The IRS just finalized the form on Feb 11. TurboTax must now submit their 8915-E software to the IRS for testing to be sure that both TurboTax and the IRS e-file computer are compatible. That process usually takes the IRS 2-3 weeks for approval to release the new form to the public.
See below for a link to sign up for an email when the form is ready.
This form is necessary to report COVID related distributions from IRA's and other retirement plans to report the distribution, pay it back over 3 years or spread the tax over 3 years.
A COVID-19 related distribution is reported on a new 8915-E form.
See this TurboTax FAQ to sign up for an e-mail when the form is ready.
https://ttlc.intuit.com/community/tax-topics/help/why-am-i-getting-getting-a-10-penalty-on-my-1099-r-when-i-withdrew-fund-during-covid-form-8915-e/01/1842324
According to the above, this was available in turbotax over a week ago, where is it? When I go to the penalty waiver section of my qualified retirement plan it simply asks about prior year (2019 or earlier) disaster or other. There is no place to talk about repayment of the distribution or taxing over 3 years in this area that I can see.
Can you tell me what to search on or where to go to enter this information?
Yes my turobotax is updated as of this morning (3/4/21)
It was in all TurboTax versions as of 2/26.
You do not normally "see" the form, it is created when you enter a 1099-R that is a COVID related distribution.
OK yes, I was looking for questions after I typed in the 1099-R.
I had originally completed that section before Feb 26.
So I had to go delete the 1099-R and re-enter the information and then I was prompted.
Looks good now thank you!
Will my state, Alabama, also allow me to divide the 401k distribution up over 3 years for taxation purposes?
Yes, according to the Alabama Society of CPAs, under section 2202 of the CARES Act, qualified individuals receive favorable tax treatment with respect to distributions from eligible retirement plans that are coronavirus-related distributions. A coronavirus-related distribution is not subject to the 10% additional tax under § 72(t) of the Internal Revenue Code (Code) (including the 25% additional tax under § 72(t)(6) for certain distributions from SIMPLE IRAs), generally is includible in income over a 3-year period, and, to the extent the distribution is eligible for tax-free rollover treatment and is contributed to an eligible retirement plan within a 3-year period, will not be includible in income. Section 2202 of the CARES Act also increases the allowable plan loan amount under § 72(p) of the Code and permits a suspension of payments for plan loans outstanding on or after March 27, 2020, that are made to qualified individuals.
Can tax return be filed now and repayment be made later so long as it is by May 17th ?
@Caseyblue wrote:
Can tax return be filed now and repayment be made later so long as it is by May 17th ?
Yes, but then you would need to amend to claim the repayment. It is better to hold off filing until the repayment is made.
I notice when you split the taxes over 3 years that the total amount is still showing added to your total income? If this is the case then will it also show the next two years as income? That cannot be right because you would be claiming thee same distribution as income 3 years?
It will show as income on the summary screen which shows gross income, not taxable income.
The IRS requires reporting all income on a *income* tax return - taxable and not-taxable.
The taxable amount will go on the 1040 line 4b or 5b.
But will this affect my tax bracket each year because it is showing all 3 years under gross income? I know it affected the stimulus by disqualifying us and we were unable to get the break in taxes on the unemployment benefits. With higher gross income each year comes with elimination of certain credits so will we be penalized all 3 years on the gross income? So this full amount of income will show all 3 years?
@Michelle1005 wrote:
But will this affect my tax bracket each year because it is showing all 3 years under gross income? I know it affected the stimulus by disqualifying us and we were unable to get the break in taxes on the unemployment benefits. With higher gross income each year comes with elimination of certain credits so will we be penalized all 3 years on the gross income? So this full amount of income will show all 3 years?
No the TurboTax income summary is just for your information. Only the amount on the 1040 line 4b or 5b is added to your AGI. If you choose to spread the tax over 3 years then that amount should be 1/3 of the distribution amount on line 4a or 5a. If that puts your AGI over $140,000 then you do not qualify for the unemployment $10,200 exemption.
Can 1/3 Repayment be made after filing return but before filing due date?
@Caseyblue wrote:
Can 1/3 Repayment be made after filing return but before filing due date?
Nothing you repay now will affect the 2020 tax, but will apply to the remaining 2021 and 2022 tax if you spread the tax over 3 years. Any 2020 repayment had to be repaid in 2020.
I do not believe that is correct. My understanding is repayment could be made before 2020 filing deadline
@Caseyblue wrote:
I do not believe that is correct. My understanding is repayment could be made before 2020 filing deadline
I think I misunderstood the question.
The repayment can be anytime within 3 years of the distribution. But if you already filed and paid the tax for the current year, you would have to amend the year that you paid the tax to receive the credit for it.
My hope was to file 2020 return now reflecting 1/3 repayment to original 401k & make the actual 1/3 repayment l just prior to May 17 filing deadline.
Hope that is OK
There are new report of this every day. Only a user that is having the problem can submit a diagnostic file but an agent must ask them to - some have and some of these threads have tokens in them.
Even the "EXPERTS" are telling them to add $0.01 to the box one amount on one 1099-R and resubmit.