early withdrawal penalty covid

[jm7777]

Hi! I installed the greatly awaited (Covid Related) updates. Revisited the Retirement withdrawal section and it didn't reflect the covid relief or tax break. Its still indicated that my tax bill could not be lowered. Please advise. Thank You!!!

[DawnC · Accepted solution]

Have you gone back through the 1099-R screens by editing your 1099-R in TurboTax?   You have to 'edit' the 1099-R even if you are not actually changing anything to get the covid questions.   If you still don't see them (they are there now), delete the 1099-R and re-enter it.  

[jm7777]

Thank You!! It worked!!

If i don't choose the option  to pay all the taxes now, it will default it to pay spread out for 3 years? Or do I have to just pay a third of what's due separately? coz it just game an option to pay all now. 

[DawnC · Accepted solution]

That is correct - If you choose the option to pay it all now, it won't be spread over three years.  If you choose not to pay it all now, TurboTax will use 8915-E to spread the tax over 3 years, equally over 2020, 2021, and 2022.   You can verify this by looking at the taxable amount on your Form 1040 - it should be 1/3 of your distribution if you elected to spread the tax.  

[jm7777]

THANK YOU!!!

[SergSam]

I've started 1099-R again and it worked on federal return (no penalty and 3 years spread of taxes). However it doesn't allow me to efile and stucks on NY state return. It shows screen with issue with following wording on header: 
"Check This Entry

Pension/Annuities/IRA Worksheet: Txble Pens/IRA(Reg Dist) We're still working on updates related to Retirement Distributions that qualify for disaster or covid relief. You can keep working on your return and we'll remove this message when it's ready."

Do you have any ETA when it will be ready for NY state returns? Do I need to start 1099-R again after that update will be ready?

[KathrynG3]

No, the ETA is as soon as possible. The engineers are working as fast as they can to get all the states updated with each of their own level of conformity to the the federal legislation.

Yes, select edit to run through the 1099-R responses again when the program is updated for New York state.

What is Form 8915-E Qualified 2020 Disaster Retirement Plan Distributions and Repayments?

@SergSam

[SergSam]

Thanks for the update, @KathrynG3 ! Is there a place where I can monitor status of the feature?

[DaveF1006]

We do not have a site where you can update the information.  I would suggest checking back daily.

[jls22]

We have not yet paid back any of our early withdrawal, but are saving so that we will.  Is there any way to not pay tax on it this year?  And if we do choose to spread the tax out over 3 years, will we be credited back once we do repay?

  Thank you.

[DMarkM1]

Yes, to avoid paying tax on the distribution this year you need to repay the entire distribution.  Other than that, you will pay at least some tax this year. 

You can pay all the taxes this year and avoid the taxes in the future years. 

If you pay back some of the distribution that will reduce the total distribution.  Which you could then spread that reduced distribution amount over the three years reducing the tax this year.