I received 2 1099-R forms for CARES ACT distributions. One has code 1, another 1b in lane 7. The taxable portion form w/ 1b is getting 10% penalty. How can I fix this?

[kostolom]

It doesn't give me the option to select: I took out this money because of qualified disaster. The taxable amount is 1/5 of the total amount of the form with 1b selected.

[kostolom]

On the form with 1 for distribution reason it worked perfectly, but the one with 1b it jeopardy charging 10% penalty on taxable amount without ability to change it

[dmertz · Accepted solution]

A workaround is needed to get around the flaw in TurboTax that prevents it from asking if the code 1B distribution is COVID-19 -related.  Enter the Form 1099-R as is but omit the code B.  Complete the follow-up questions, then, when you reach the Review Your 1099-R Info page, edit this 1099-R and add the code-B selection.  The COVID-19-related information will remain even though you won't have access to those questions with the code B present..