Early IRA distribution under CARES act

Forum|Forum|5 years ago
December 29, 2020
24 replies
91 views

I took an early IRA distribution under the CARES act due to COVID-19.

I would like to spread the tax over 3 years as allowed under CARES.

How do I enter this in Turbotax Premier? Is this functionality supported yet?

So far, I do not see any questions that allow to classify early distribution under CARES to avoid early withdrawal penalty -

nor a question whether to split tax over 3 years.

I know it's still early - I'm self-employed and trying to get an estimate for 2020 and decide whether to made final estimated tax payment in January.

Any help is appreciated.

Thanks!

dmertz

Level 15

This has not yet been implemented in 2020 TurboTax. When implemented, you can expect it to behave similarly to the way the reporting of hurricane and wildfire disaster distributions was done in the past.

If you plan on spreading the income over 3 years, for estimated-tax planning purposes you could try entering a code 2 Form 1099-R for a distribution of 1/3 of the actual amount of the distribution. (The maximum CRD is $100,000, so any actual amount distributed beyond $100,000 that would need to be entered separately with code 1). This form will have the amount in boxes 1 and 2a, box 2b Taxable amount not determined marked, code 2 in box 7, the IRA/SEP/SIMPLE box marked, and any taxes withheld in the boxes for federal and state tax withholding.

leuchtmannw

Level 2

i took an early distribution from my IRA due to COVID-what code do i use when entering by 1099R-?

Merrill Lynch put code 1 in the box 7, can I insert code 2 saying "with Exception"-however there is nothing about the CARES act or COVID as an explanation, I dont want to make a mistake and be audited so please make sure your answer is correct-thank you so much

CatinaT1

Level 15

You will report this on a Form 8915-E. The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act. So this form cannot be included in the TurboTax program. You will not be able to proceed until the form is available.

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

We estimate it will be sometime in February 2021 before the form is available. You can watch this link for the form availability. Currently, the form is not listed here since there is no estimated date. Once there is, you will find the form listed with the date available.

IRS forms availability table for TurboTax individual (personal) tax products

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

leuchtmannw

Level 2

any idea when this form for early withdraw due to COVID will be available

please advise

thank You

463046

Level 2

how do i complete my taxes wiyh turbo showing 10% penalty

CatinaT1

Level 15

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

IRS forms availability table for TurboTax individual (personal) tax products

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

Please sign-up here and we will email you once the form is live.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

pepper11_2

Level 2

I can see the form on the IRS website, when do we expect to be able to enter this info in TT? I just tried it this evening and I didn't see a reference to it when editing my SEP withdrawal. Thanks!