Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
briekitty
New Member

I withdrew money from my 401k, how/where do I divide it up over 3 years as allowed under the cares act? my 1099 just shows the total amount.

 
4 Replies
ColeenD3
Expert Alumni

I withdrew money from my 401k, how/where do I divide it up over 3 years as allowed under the cares act? my 1099 just shows the total amount.

Form 8915 -E is not yet finalized by the IRS. Please see this LINK.

.

Yes, you may repay all or part of the corona virus-related distribution to an eligible retirement plan over a 3 year (2020, 2021, & 2022) period after the date of the distribution.  You must qualify for IRS special tax rules under Cares Act:

  • You are diagnosed with the SARS-Cov2.
  • You are a spouse or a dependent of a person diagnosed with the virus.
  • You experienced financial hardship related to the virus.
  • Test must be done with an approved Center for Disease Control and Prevention. 

[Edited 2/3/21| 7:00PM]

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Critter-3
Level 15

I withdrew money from my 401k, how/where do I divide it up over 3 years as allowed under the cares act? my 1099 just shows the total amount.

@ColeenD3 

 

NOOOOOO.... this statement is wrong : Since you paid taxes already, then you may divide it into 3 equal payments as well.

 

The entire amount withheld in 2020   MUST  be entered on the 2020 return ... failure to do so will delay the processing of the return while the IRS fixes the error and if they don't then amending of  the return will be needed.  Although the distribution can be divided into 3 parts over 3 tax years the taxes withheld cannot be divided.  

 

If they wish to let the IRS hold some of the 2020 refund to the next tax year so they are not short in 2021 they can by applying some or all of the refund.  Then on the 2021 return they can do it again ... apply some or all of the 2021 refund to the 2022 return to cover the third installment. 

 

defray
Returning Member

I withdrew money from my 401k, how/where do I divide it up over 3 years as allowed under the cares act? my 1099 just shows the total amount.

 I believe that the 8915 e form will allow you to pay the taxes on the entire distribution you took over a period of three years.  For example, if you took out 10k, you could opt to pay one third of the taxes in year 2020, one third of the taxes in year 2021 and the remaining one third of taxes in year 2022. I also believe that the form would incorporate the waiver of the 10 percent penalty on distributions for those under age 59 and half.  Unfortunately, we are all waiting for the IRS to finalize the form and allow it to be filed electronically. So far, this is what I have gathered.  It would be nice if someone from Turbotax would chime in and set us all straight.

DawnC
Expert Alumni

I withdrew money from my 401k, how/where do I divide it up over 3 years as allowed under the cares act? my 1099 just shows the total amount.

If you took a distribution from a retirement account due to corona virus related issues, you will be able to waive the penalty and spread the ordinary tax over tax years 2020-2022.  However, the forms have not been finalized by the IRS yet, so TurboTax has not been updated.  Once the forms are final (no date determined by IRS yet), you will see the options to apply the tax relief provisions on Form 8915-E.   If you click on that link, you will be able to sign up for an email notification when the form is ready!  The IRS does not start accepting returns until Feb 12th, so check back then to see what the status is.   

 

Those who qualify as individuals directly impacted by the pandemic will be able to withdraw up to $100k from their retirement accounts without facing the 10% early withdrawal penalty.  You qualify if:

 

  • You, your spouse, or your dependent are diagnosed with COVID-19
  • You experience adverse financial consequences as a result of being quarantined, furloughed, or laid off
  • You had work hours reduced to COVID-19
  • You’re unable to work due to child care closure or hour reduction

 

The distribution would be taxed over 2020, 2021, and 2022. You’ll have that time to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions, and if you pay back the amount within that time, you’ll be able to claim a refund on those taxes.

 

As things change, TurboTax is continually updated and able to handle every situation that arises to ensure your taxes are done right, so you’ll receive your maximum refund.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Dynamic AdsDynamic Ads
Privacy Settings
v