I took out my pension for covid 19 reasons. How do I split the taxable income in 3 years, and how do I enter the information for not receiving a 10% penalty.

[ideluna562]

Form 1099-R. Pension, Box 1. $11,000. 2a $11,000. How do I split the taxable income in my turbo tax deluxe boxes to show only $3000 in taxable income since the tax code says I can split the income into 3 years. And how do I enter the information correctly so I won't get assessed a 10% early withdraw for covid 19 reasons.

[MinhT1]

If you have been affected by Covid-19, your early distribution will be exempted from the early withdrawal penalty and you can spread the taxation over 3 years.

However, at this point in time the Form 8915-E (Qualified 2020 Disaster Retirement Plan Distributions and Repayments (Use for Coronavirus-Related Distributions)) is not finalized. We currently do not have an estimated date when the form is ready.

Please sign-up here and we will email you once the form is live.

[ideluna562]

Thank you. One more question. What will happen if the form 8915-e in not ready on time to file before April 15, 2021? Will there be a way to enter my pension funds and taxable income, and early distribution exempt? Thanks again. 

[PattiF]

Form 8915-E will be ready to file before April 15. With all of the changes to the tax laws from the CARES Act, the IRS is taking some time to complete the forms needed. It will be ready soon. 

Please sign-up here if you have not already done so and we will email you once the form is live.

[ideluna562]

Thank you. Do I have to report all of the pension funds this year or am I able to report the income over the next 3 years. So since I recieved 11k in funds, can I break up the pension income in my reporting over 3 years, so $3k every year for the next 3 years. Or what exactly can I report over the next three years?

[DawnC]

You are (or will be when the form is ready) allowed to spread the ordinary tax on the distribution (the penalty is waived) over 3 years, 2020-2022.    Once the form is ready, you will enter your 1099-R exactly how you see it.   After you enter it, TurboTax will ask you if the distribution was covid-related and if you select YES, we will complete 8915-E for you.   The total tax will be calculated and then you choose to only pay 1/3 of that amount on this year's (2020) tax return, 1/3 on your 2021 return, and the last 1/3 on your 2022 return.    

But since the form is not ready yet, none of those questions are yet in the software.  Its release is tentatively scheduled for 02/25.