Cares Act 401k withdrawal - Pay Back Question

[fanfare]

"You have until the due date of your 2020 return, May 17, 2021,"

this is generally true , but in your specific case, since you already e-Filed, you have until Oct 15.

Most people don't know this. I didn't. that's why I said use form 4868 initially.

Is there anything else ?

If you don't accept this analysis, refer to some other thread for the answer.

[Dzizich22]

If you had a loan received in Dec 2020 for 40K and paid back 15k prior to filing your 2020 return.  Do you need to amend the return now to show that you had a 25k loan instead of a 40k loan?  Just trying to figure out the disbursed amount will be 13,333 in 21 and 22, or 8,333.

[fanfare]

I assume you are referring to a COVID-19 related distributions, not  a loan. loans don't go on your tax return.

If you paid back before you filed your 2020 tax return, then that pay back  would be entered on your 2020 tax return. Did you do that? If not, you need to amend 2020.

assuming rounding, 13,333 -15,000 is -1,667 which goes to your 2021 tax return so the second taxable part on your Form 8915-F will be 11,666.

If you report you paid back 15,000 before filing your 2021 return, don't amend but you will be off by a year on your 5498 and may be questioned by the IRS.

[GeorgeM777]

Maybe.  You effected a withdrawal of $40,000 in 2020.  Given IRS guidance, you had the option of including all of that withdrawal amount as income in 2020, or you had the option of including the withdrawal amount in income ratably over a three-year period, starting with the year in which you received your distribution.  Thus, for 2020, what option did you choose?  

You do have the option to repay all or part of the amount of a coronavirus-related distribution to your 401k, provided that you complete the repayment within three years after the date that the distribution was received.  It appears that you have already started to repay your distribution.  According to the IRS, if you repay a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct trustee-to-trustee transfer so that you do not owe federal income tax on the distribution.

Based on whatever option you chose in 2020, as you start to repay your distribution you would go back and amend the prior year return (in this case 2020) to reflect that whatever amount of the withdrawal you included in income has in fact been paid back, and therefore, whatever tax was attributable to the distribution for 2020 should be refunded to you.  

The following IRS example may prove helpful in understanding how repayment affects taxes and amended returns:

"If, for example, you receive a coronavirus-related distribution in 2020, you choose to include the distribution amount in income over a 3-year period (2020, 2021, and 2022), and you choose to repay the full amount to an eligible retirement plan in 2022, you may file amended federal income tax returns for 2020 and 2021 to claim a refund of the tax attributable to the amount of the distribution that you included in income for those years, and you will not be required to include any amount in income in 2022."

Additionally, here is a link to the IRS webpage from which the above example was taken.  There are other FAQs on this page that you might find helpful.  

Coronavirus Relief_Retirement Plans and IRAs_FAQs

@Dzizich22

[terencenewman]

I took a 2020 CARES ACT IRA Loan for $100,000 in 2020.  I took 1/3  or b$ 333,333 as a Deduction for my IRA on 2020 1040_SR and agreed to take it out for 3 years.

I paid off the Loan at end of 2021 and did a Rollover deposit of $100,000 back into my IRA.

Turbo TAX is ADDING  $33,333 to my 2021 RMD even though I have Paid off the CARES Loan.  I tried to answer NO to the Question "Did you take a CARES Distribution in 2020".   Neither Yes nor No hand any effect on Turbo Tax ADDING the $33,000 to my 2021 RMD.  

Turbo TAX  also said it had NO FORMS to process for CARES repayments in 2021 as of 3/18/2021, even though their Add for the PREMIER Version said it was INCLUDED in 2021 Premier Version.

How do I STOP the $33,333 being ADDED to my RMD and WHEN will Premier  Turbo TAX  handle CARES repayments ?????  

[fanfare]

without the Form   8915-F   you can't report this correctly.

Everyone is still waiting for TurboTax to add it in  !