I know I am liable for the tax bill regardless but my question really is how do I split it up over the 3 years in the turbo tax software so that I don't owe as much immediately and lessen my overall yearly income and move my tax bracket back down.
You need to report the portion of the distribution you want to pay tax on each year on form 8915-E Qualified 2020 Disaster Retirement Plan Distributions and Repayments. Unfortunately, the IRS has not yet finalized that form, and as such it is not available yet in TurboTax.
When TurboTax is good and ready, it will ask you if you want to spread the tax.
Then it will divide by 3 if you say yes.
Note: this functionality is already working in other tax software, so I don't know how one can claim that the IRS is delaying the forms.
BUT, it doesn't matter since IRS is not receiving e-Files until Feb.
Is there a target date as to when Turbo Tax will have this available.
You will report this on a Form 8915-E. The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act. So this form cannot be included in the TurboTax program. You will not be able to proceed until the form is available.
The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.
We estimate it will be sometime in February 2021 before the form is available. You can watch this link for the form availability. Currently, the form is not listed here since there is no estimated date. Once there is, you will find the form listed with the date available.
IRS forms availability table for TurboTax individual (personal) tax products
Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.
Please sign-up here and we will email you once the form is live.
The IRS shows the form is available at: https://www.irs.gov/pub/irs-pdf/f8915e.pdf
Any timetable for TurboTax to have this ready?
The 8915-E will be ready soon. Form 8915-E: Qualified 2020 Disaster Retirement Plan Distributions and Repayments, which is used for COVID-related early distributions, will be e-fileable starting 2/24. The IRS is updating form 5329’s instructions to make it clear that COVID related exceptions cannot use 5329 and should use the new 8915-E.
The 8915-E will be used for penalty relief from early retirement plan distributions and include the option to spread the distribution income over 3 years. This may be a good option if the distribution is pushing you into a higher marginal tax bracket. You may end up paying less tax if you spread the distribution over the 3 years
It's 2/24 and Turbo Tax still says to check back later.
Is there an update?
@TCABarry wrote:
It's 2/24 and Turbo Tax still says to check back later.
Is there an update?
Form 8915-E, Qualified 2020 Disaster Retirement Plan Distributions and Repayments is scheduled to be available in TurboTax on 02/25/2021
Go to this website for IRS forms availability in TurboTax - https://care-cdn.prodsupportsite.a.intuit.com/forms-availability/turbotax_fed_online_individual.html