To enter the exception, please perform the following steps.
[Edited 03-02-2021|05:40 PM PST]
I took out a 401k covid 19 withdrawal . My question is where and when do I get the option to spread out my owed taxes over the course of 3 years. I have my taxes all done on turbo tax online app. I’m just holding off on finalizing them before I am sure I can pay it over 3 years? Does this option show up once I submit my taxes? Any feed back or direction would be greatly appreciate. I really don’t want to have to do my taxes elsewhere. Thank you.
@Rodas1987 wrote:
I took out a 401k covid 19 withdrawal . My question is where and when do I get the option to spread out my owed taxes over the course of 3 years. I have my taxes all done on turbo tax online app. I’m just holding off on finalizing them before I am sure I can pay it over 3 years? Does this option show up once I submit my taxes? Any feed back or direction would be greatly appreciate. I really don’t want to have to do my taxes elsewhere. Thank you.
You have to enter the Form 1099-R. After entry of the form you will be asked a series of questions. If the distribution was due to Covid-19 you can then have this distribution spread out over three years.
I did answer those questions. But I still don’t see that option when it’s says to finalize my taxes. I just would hate to finalize it and not be able to pay it over 3 years. Is that option only when I finalize it and submit it???
@Rodas1987 wrote:
I did answer those questions. But I still don’t see that option when it’s says to finalize my taxes. I just would hate to finalize it and not be able to pay it over 3 years. Is that option only when I finalize it and submit it???
Back in the Federal Review section if you answered that the distribution was due to Covid-19 there would have been a screen asking you if you wanted to have all of the distribution reported on the 2020 tax return or have it spread out over three years. If you did NOT check the box to have it on the 2020 return then only 1/3 will be on the 2020 tax return, 1/3 on the 2021 return and the final 1/3 on the 2022 return.
Is that one desktop. I’m doing mine on my phone. Maybe I’ll try it on my tablet. Thank you.
I did this same thing in 2020, but now for 2021 what do I need to do to continue spreading out the tax for year 2 of the tax payments?
To report the 2021 CARES Act retirement plan distribution for 2020 that gave you 3 years to repay it back, follow these steps:
With your federal return open:
You'll need to revisit this area
Unfortunately, IRS instructions related to repayments of disaster distributions weren't ready in time for us to include them in this release. Please revisit this area later.
@GuyGiantic
Hello,
I’m trying to file my taxes but keep getting a message about the 401k 3 year payment plan. It’s says “Unfortunately, IRS instructions related to repayments of disaster distributions weren’t ready in time for us to include them in this release. Please revisit this area later”. Does this mean I have to wait until March when it’s available to file my taxes?
Yes, if you deferred 2/3 of your1099R distribution on your 2020 return, you are to pay 1/3 this year. Turbo tax uses a 8915-F to report this repayment and that won't be ready until 3/31.
That form is available now on the IRS website. To make people wait until 3/31 is a really long time. I guess I will have to go elsewhere then because honestly that’s ridiculous when the form is readily available now. I literally have it sitting right next to me. And also, that means TurboTax can’t fully service ALL of their customers with certain needs or different situations which is highly disappointing. But thank you for your quick response.
Hello
I have withdrawn all of my 401K plan and used the funds to pay off my mortgage. Other than paying off mortgage, I have not used it for any other purpose. Is there a tax discount that I am eligible for.
Thanks.
[PII removed]
No. Withdrawal of funds to pay your mortgage is not one of the exceptions to the penalty. If you had a hardship, review the details in the link below to see if you might qualify under that section. The following are the list of exceptions to the premature distribution penalty if you are under age 55.
No.Exception
01 Qualified retirement plan distributions (doesn’t apply to IRAs) you receive after separation from service when the separation from service occurs in or after the year you reach age 55 (age 50 for qualified public safety employees).
02 Distributions made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from an employer plan, payments must begin after separation from service).
03 Distributions due to total and permanent disability. You are considered disabled if you can furnish proof that you can’t do any substantial gainful activity because of your physical or mental condition. A medical determination that your condition can be expected to result in death or to be of long, continued, and indefinite duration must be made.
04 Distributions due to death (doesn’t apply to modified endowment contracts).
05 Qualified retirement plan distributions up to the amount you paid for unreimbursed medical expenses during the year minus 7.5% of your adjusted gross income (AGI) for the year.
06 Qualified retirement plan distributions made to an alternate payee under a qualified domestic relations order (doesn’t apply to IRAs).
07 IRA distributions made to certain unemployed individuals for health insurance premiums.
08 IRA distributions made for qualified higher education expenses.
09 IRA distributions made for the purchase of a first home, up to $10,000.
10 Qualified retirement plan distributions made due to an IRS levy.
11 Qualified distributions to reservists while serving on active duty for at least 180 days.
12 Other (see IRS Instructions Form 5329). Also, enter this code if more than one exception applies.
Is Turbo Tax updated yet with the coronavirus related distribution from prior year?
Yes, Form 8915-F has been updated in TurboTax. If you are using a desktop version you will need to install updates. To update you can follow these steps:
@MrBluuee If you are on the screen that says Hi (your name), let's keep working on your taxes! click on one of the boxes and then on Review/Edit or Pick up where you left off and go back to your 2021 online tax return.
You must go to the Retirement Income section of the program for a Form 1099-R to be able to enter your 2nd year of the 2020 distribution -
Click on Federal
Click on Wages & Income
Scroll down to Retirement Plans and Social Security
On IRA, 401(k), Pension Plan Withdrawals (1099-R), click on the Start or Revisit button
On the screen Did you get a 1099-R in 2021? NO
Answer Yes when asked Have you ever taken a disaster distribution before 2021?
Answer Yes when asked if you took a Qualified 2020 Disaster Distribution
Check the box that this was a Coronavirus-related distribution reported in 2020
In the box 2020 Form 8915-E, line 4, column b - Leave blank or enter a 0
This is not required on a Form 8915-F for a Coronavirus-related distribution
If the 2020 distribution was from an account that was Not an IRA
Enter 1/3 of the amount from the 2020 distribution in both boxes for Line 9
2020 Form 8915E, line 9, if you checked the box on that line, enter 0
2020 Form 8915E Line 9
If the 2020 distribution was from an IRA account
Enter 1/3 of the amount from the 2020 distribution in both boxes for Line 17
2020 Form 8915E, line 17, if you checked the box on that line, enter 0
2020 Form 8915E Line 17
Do not enter anything in the other boxes, leave them blank (empty)
The 1/3 of the amount from the 2020 distribution will be entered on the 2021 Form 1040 Line 4b if from an IRA or on Line 5b if from a retirement plan other than an IRA
After completing the Wages & Income section you will land on a screen Did you take a disaster distribution at any time between 2018 and 2020?
Answer NO since you have already completed the entering the 1/3 of the 2020 distribution.
You can view your Form 1040 at any time using the online editions. Click on Tax Tools on the left side of the online program screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.
Using the desktop editions click on Forms. Open the Form 1040
NOTE - During Federal Review you may get a notice to check an entry. Clicking Check Entries takes you to the Check This Entry screen showing a box for entering a FEMA Disaster name. Put your cursor in the box (click in the box) and then click on the spacebar. Click on Continue On the following screen Run Smart Check Again click on Done.
The Form 8915-F you completed already has the box for the Coronavirus checked on Item D of the form.
As stated on the Form 8915-F -
If your disaster is the coronavirus, check this box ▶ Don’t list the coronavirus in item C.