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jenilynwalters
New Member

How do I claim the covid 19 hardship so I do not have to pay the 10% early withdrawal penalty for my 401k on my 2020 taxes?

 
3 Replies
DanaB27
Expert Alumni

How do I claim the covid 19 hardship so I do not have to pay the 10% early withdrawal penalty for my 401k on my 2020 taxes?

Form 8915 -E, that reports the Coronavirus-related relief measures for retirement plan distributions, is not yet finalized by the IRS. TurboTax will update this section after the IRS releases the final version of Form 8915-E and then you can finish your distribution information.

 

Please follow these steps to enter your 1099-R:

  1. Login to your TurboTax Account 
  2. Click on the Search box on the top and type “1099-R”
  3. Click on “Jump to 1099-R” and you should see the “Your 1099-R Entries” screen
  4. Click "edit" and continue until "Tell us if any of these uncommon situations apply" screen
  5. Select "I took out this money because of a qualified disaster (includes COVID-19)" (TurboTax will walk you through questions once this section is ready)

 

 

Those who qualify as individuals directly impacted by the pandemic will be able to withdraw up to $100k from their retirement accounts without facing the 10% early withdrawal penalty.

 

You qualify if:

  • You, your spouse, or your dependent are diagnosed with COVID-19
  • You experience adverse financial consequences as a result of being quarantined, furloughed, or laid off or having work hours reduced because of COVID-19
  • You’re unable to work due to child care closure or hour reduction because of Covid-19
  • You experience adverse financial consequences as a result of closing or reducing hours of a business that you own or operate due to SARS-CoV-2 or COVID-19.

 

You can choose to have the distribution taxed over 2020, 2021, and 2022 instead of only in 2020. You’ll have three years to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions. If you pay back the amount within that time, you’ll be able to claim a refund on those taxes paid when you file an amended tax return. Please see IRS Coronavirus-related relief for retirement plans and IRAs for more details.

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Bill1962
New Member

How do I claim the covid 19 hardship so I do not have to pay the 10% early withdrawal penalty for my 401k on my 2020 taxes?

When I go through my 1099-r entry, there isn't the "I took out this money because of a qualified disaster (includes COVID-19)" box to check.

pattif12
Expert Alumni

How do I claim the covid 19 hardship so I do not have to pay the 10% early withdrawal penalty for my 401k on my 2020 taxes?

The form  (Form 8915-E) that you will use so that you do not have to pay the 10% early withdrawal penalty is not available.

 

There was a delay at the IRS for the release of the form. It will be ready to be used and e-fileable starting on February 24. 

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