I withdrew 50K from 401K due to covid

[yadira1]

I withdrew 50K from my 401K in Dec due to Covid.   I took out 50K and paid 5K for interest.   

I repaid 21K  in Jan/Feb 2021. Separately, I made a contribution to my 401K for 2020 (6K)  back in May 2020. 

I want to spread the 29K over the next three years - but when I enter the information on turbo tax download software, it's not picking up  1/3 of the amount but the entire 29K as income for this year. 

This has to be an error w/ the software.   When I click on box #7  - put 1 but click on IRA/SEP/Simple - it looks like the software calculates everything correctly.     Is this a glitch in the software? 

I need to file my taxes soon.

thank you  

[yadira1]

I can't seem to find this form in the search form section.   My 401K withdrawal is not being calculated correctly and not taking 1/3 of the withdrawal.   

[DawnC]

You won't enter anything directly on Form 8915-E and it won't show up in your forms until you indicate on the 1099-R entry that it was due to covid.  Delete the 1099-R you started entering and re-enter it.   Enter the 1099-R exactly as you see and once you hit Continue, you will be asked if it was a covid related withdrawal.   Once you indicate that it was covid related, TurboTax will remove the 10% penalty and spread the tax over three years.   You will see a screen at the end that asks if you want to pay all of the tax on this year's return.   Don't check that box if you want to spread the distribution over 2020-2022.  After that, you will find the form in your list of tax forms.  @yadira1

[yadira1]

Deleted 1099 and still not working.  It's still not calculating income over three years unless I sign the IRA/Simple/ on box 7 even though my distribution is coming from 401K account.

What is the difference between repaying within 2 months of taking out the money and rolling over within 60 days?   Perhaps I am not inputting the info correctly.   So I took out 50K in Dec and put back 20K in January and Feb - within 60  days.  Is this considered a rolloever?  In the software, I said that I did various things with the money I took out.   After that I get a few questions that are a bit trick.    When they ask if I did a rolleover - should I say 20K and when they ask if I repaid any- I need to say zero??   Or should I just say that I repaid 20K?    Please let me know.  I need to submit my taxes by latest tomorrow.  Thank you.

This is so frustrating.

[macuser_22]

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@yadira1 wrote:

Deleted 1099 and still not working.  It's still not calculating income over three years unless I sign the IRA/Simple/ on box 7 even though my distribution is coming from 401K account.

What is the difference between repaying within 2 months of taking out the money and rolling over within 60 days?   Perhaps I am not inputting the info correctly.   So I took out 50K in Dec and put back 20K in January and Feb - within 60  days.  Is this considered a rolloever?  In the software, I said that I did various things with the money I took out.   After that I get a few questions that are a bit trick.    When they ask if I did a rolleover - should I say 20K and when they ask if I repaid any- I need to say zero??   Or should I just say that I repaid 20K?    Please let me know.  I need to submit my taxes by latest tomorrow.  Thank you.

This is so frustrating.

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Why tomorrow?  The filing date is April 15.

If you did a 60 day rollover then it is not a COVID related distribution at all, just a simple rollover.  Say it was not COVID related and then say you "moved" the money and rolled it (or part of it) . over.

Delete the 1099-R to reset prior answers and re-enter.

(You only say it was COVID related if you want to pay it back (or pay the tax) over 3 years.)

[fanfare]

@yadira1 

there are two places to enter the amount paid back, and if you enter it in both places it is counted twice.

I posted a question about this; maybe I'm just dense.

If you want the COVID treatment you must enter the amount paid back in, at the least, the COVID questions part.

it should be the same for a 401K as for an IRA with no basis.

[yadira1]

Thank you.  Do you know how the repayment calculation works?

If you take out 50K pay 5K in taxes and you repay 21K -  

is the math:   50K - 21K = 29K and that is spread over three years  minus the 21K (repay)

Turbo tax is taking the 50K dividing it by 3  or 16,667 and then subtracting 21,000 (repayments)

If they apply all the repayments this year -  what about 2021 and 2022?  I'd owe 16.7 every year if I don't prepay in 2021?    

can someone explain the repayment calculation?

thank you

[fanfare]

well yes it is divided evenly over three years.

if your payback this year is more than one third then

21,000 - 16,667 is carried over to offset your taxable amount (one third)  in 2021.

we'll have to wait for 2022 to see exactly how this will be  setup on the 2021 tax forms.

moreover you will have the option to pay back more of it in 2021, and in 2022.

let's cross that bridge when we come to it.

[fanfare]

When I use TurboTax Online, in your example your distribution is 29,000 and one third of that is 9667

21,000 - 9,667 will be carried over to 2021.

this is due to the fact that the amount paid back is counted twice.

so if you were confused before now you are doubly confused.

[fanfare]

@macuser_22 

"If you did a 60 day rollover then it is not a COVID related distribution at all, just a simple rollover.  Say it was not COVID related and then say you "moved" the money and rolled it (or part of it) . over."

This cannot be correct.

If you were affected by COVID then your distribution can be designated COVID related by filing Form 8915-E.

It doesn't matter that you rolled it over in part within 60 days. in fact, you have three years to pay it back,

and you have until the due date of your 2020 return, including extensions to pay back a portion for 2020.

Q. what's the difference between a rollover of part  and a payback of part?

A. None.
:"

[macuser_22]

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@fanfare wrote:

@macuser_22 

"If you did a 60 day rollover then it is not a COVID related distribution at all, just a simple rollover.  Say it was not COVID related and then say you "moved" the money and rolled it (or part of it) . over."

This cannot be correct.

If you were affected by COVID then your distribution can be designated COVID related by filing Form 8915-E.

It doesn't matter that you rolled it over in part within 60 days. in fact, you have three years to pay it back,

and you have until the due date of your 2020 return, including extensions to pay back a portion for 2020.

Q. what's the difference between a rollover of part  and a payback of part?

A. None.
:"

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The difference is, if it is a simple 60 day rollover that is allowed reguardless of COVID then the 8915-E is not required and just complicates things.      If the questions are not answered correctly then it might be split over 3 years that is not intended.     It is simply not necessary.

You are also claiming that it was COVID related for one of the qualifying reasons and might have to prove it later, but no reason whatsoever is needed for a 60 day rollover.

[fanfare]

If you are arguing that your tax life is simpler if you don't file Form 8915-E, OK, I won't disagree.

But what if you want to split the tax over three years ?