I received an early withdrawal of my retirement account due to COVID. When will software be updated to include IRS laws for this?

[maxwellodog17]

Sorry, didn't figure out until last night. I had already entered my 1099-R before I did the update. So I deleted the 1099-R that had the distribution, and re-added it to the return, it then properly went thru all the Covid distribution questions for a hardship withdrawal and calculated everything correctly, including asking me if I wanted to pay the tax all this year or split evenly over 3 years.

Thanks

[Hillstones]

Yep!  Me too.  I decided to start fresh with a new return to make sure any calculations were correct regarding COVID related withdrawals from a retirement account.  I had previously read to divide the amount by 3 to pay the taxable income over a 3 year period, but now that TurboTax is updated for COVID and the CARES Act, you can now input the full amount of your 1099-R and go through all the COVID questions, including the option to pay the taxes in full for 2020, or split them evenly over a 3 year period.

One thing I saw in the comments is that self-employed people affected by COVID should wait until after March 11 because there is another COVID related form that should be live in TurboTax after March 11, once the IRS finalizes that form.

[smaakfive]

Any update on when this update will be ready?

[Hillstones]

The TurboTax software and website was updated on Feb. 25 for COVID Form 8915-E (TurboTax version 2020.r19.040, or later).  If you are self-employed and impacted from COVID19, I think an additional tax form for self-employed people will be updated on March 11.  This was previously mentioned in the comments on this post.

[DawnC]

The 8915-E is currently in TurboTax so you can apply the covid-related relief to your retirement distributions at this time.   If you have already entered your 1099-R(s), you can either EDIT the form, or delete it and re-enter it (this may be a better option if you are experiencing difficulties), and you should see the covid questions after you hit ''Continue''.   You will be able to waive the 10% penalty and spread the tax ratably over tax years 2020-2022.  @smaakfive

Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals is also now available to e-file in TurboTax as well.  @Hillstones

More details on covid relief provided by 8915-E.   

And 7202 - Tax Relief for Self-Employed and Small Businesses Under the Families First Coronavirus Response Act

[smaakfive]

I tried to delete and re-enter the 1099-R. I have sent Federal but when I try to submit State, I always get “Check This Entry”

Pension Deduction Worksheet:Federal Amount 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 will remove this message when it’s ready.

[MarilynG1]

@smaakfive It could be that your State has not yet finalized their tax regulations to comply with the Federal CARES act.

Click this link for more info on How to Contact your State Dept of Revenue to verify this.  

TurboTax will incorporate the state changes as soon as soon as they are able to after the states release them. 

[magdiwang]

8915-E is now available. Go to Turbotax 2020 and go to Forms and search 8915-E

[Hillstones]

You don't need to search for the form.  When you enter your withdrawal information and answer the COVID questions, it automatically processes the 8915-E form for you.  If it had already been entered, delete the entry and re-enter the 1099-R information and you will get the COVID questions.  Make sure your TurboTax software version is 2020.r19.040 or later.  The current version is now 2020.r21.042.

[philipwl]

Even after the latest update, TurboTax Home/Bus does not calculate 1040 Line 4b correctly if there are two IRA COVID distributions to report. TT Support is aware. Until TurboTax creates a software fix or other workaround for this error, and to maintain an accurate "Federal Tax Due" result, a temporary bandaid may be to include the second IRA distribution as "Other Common Income" in the 1099-MISC income section. Not sure how IRS will like that one if a TurboTax correction is not available before April 15!

[russellmroberts]

I have TT Premier 2020 for windows.  Even after checking for updates, my version says 20.000.1654.    Even after deleting and reentering 1099-R, I do not get any of the COVID relief related questions.    I took COVID related early distribution from 401K and need to spread taxes over 3 years.    As of today, the software is not giving me the option to provide that information in the step by step entry method.   Please advise..

[DoninGA]

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@russellmroberts wrote:

I have TT Premier 2020 for windows.  Even after checking for updates, my version says 20.000.1654.    Even after deleting and reentering 1099-R, I do not get any of the COVID relief related questions.    I took COVID related early distribution from 401K and need to spread taxes over 3 years.    As of today, the software is not giving me the option to provide that information in the step by step entry method.   Please advise..

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Your version is the latest release for the 2020 Windows TurboTax desktop edition.

What is the code in box 7 of the Form 1099-R?  Is the IRA/SEP/SIMPLE box checked?  Is there an amount entered in box 2a?  Are any boxes in 2b checked?

[russellmroberts]

Box 7 is a 2.  IRA/SEP/SIMPLE box is NOT checked.   

However, I went through the step-by-step entry method again, and now it is asking me the COVID related questions.    So I'm cooking now.  Thanks for the reply.   

[Hillstones]

Glad it is working.  I was going to suggest uninstalling TT for Windows and re-downloading it from the website to make sure you do have the latest version, but perhaps the Premier edition has a different version number than the Deluxe edition.

[Hillstones]

We did our taxes after the Feb 25th update and had two IRA COVID distributions.  When we submitted, it said no errors and both Federal and CA returns were accepted.  Now a letter from the IRS is arriving in the mail today.  If there were still bugs in the software to miscalculate our taxes, thanks a lot TurboTax!