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How do I put in the qualified 10% tax withdrawal exemption for Covid 19?

I received a email stating that Turbo tax updated the 401k exemption for Covid19 on 2/27. However there is no instructions on how to apply it to my tax forms.
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2 Replies
DanaB27
Employee Tax Expert

How do I put in the qualified 10% tax withdrawal exemption for Covid 19?

If you have code 1B in box 7 then please follow these workaround steps from user dmertz as discussed in 1099R Coronavirus Exception Issue

  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 enter all 1099-R information, enter code "1" but do not enter code "B" in box 7
  4. 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)"
  6. Answer all questions in regards to the COVID distribution to trigger that you qualify for the Qualified Disaster Retirement treatment.
  7.  On the “Review your 1099-R info” screen click "edit" and add code "B" to the 1099-R Form entry.
  8. When you continue the COVID questions are still accessible

 

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.

 

Only TurboTax Online has this issue currently and TurboTax is working on it. TurboTax Desktop does not have the issue. Please see How do I switch from TurboTax Online to the TurboTax software? for additional information.

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kndwilley1840
Returning Member

How do I put in the qualified 10% tax withdrawal exemption for Covid 19?

Turbotax desktop - also has an issue and is not working for Cares Act withdrawals - talked to expert on 2/27/2021 but as of yet they have not fixed problem so the desktop version does not work either.

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