Does anyone know how to report a COVID19 401K Withdrawal as taxable income? TurboTax states it does not yet have this information available.

[austynfarr]

I took a withdrawal from my 401k according to the Disaster Relief Distribution option, for COVID19. It states it does not have the 10% tax penalty for the early withdrawal. When reviewing the IRS publication, it states you can report the distribution amount over three years beginning with 2020. TurboTax also says they do not yet have the COVID19 Disaster option available in TurboTax yet. I am just trying to find out if it is correct for me to be paying additional tax after I already paid a 10% tax when I received the distribution, or if I should be splitting the reported amount on my 1099-R in thirds to report only 1/3 this year.

[SamS1]

That depends.  If your withdrawal falls within the guidelines for the deferral, you will need to complete the form 8915-E but that form is not ready in TurboTax.  The form 8915-E will deal with the Cares Act retirement distribution exclusions and has not been released by the IRS.  We do not anticipate this form being completed and released until mid-February.  After you enter your retirement plan distribution in the 1099R screen then continue, you will see a screen for "Uncommon Situations".  The first box relates to natural disasters, including Covis-19.  Once that box is active, you will be able to enter your 2020 pandemic retirement distribution information.  This form should be released around 2/18.

The advantages of spreading the withdrawal amount over 3 years is you could possibly be taxed at a lower tax rate, depending on your income levels.  Also, the 10% withholding you mentioned is just that, withholding much like the federal withholding off your pay check.  That probably will not be the amount of tax will end up paying on the distribution, again depending on which tax bracket you are in.  But breaking the distribution up and paying taxes on it over 3 years does have some advantages if you are being pushed into a higher bracket by the additional income from the withdrawal.

Here is some information on early withdrawals and the pandemic

[Opus 17]

Regarding the CARES act, the IRS has not released the form so we have no idea when you will be able to file.

Regarding the tax, any withholding at the time of withdrawal is only a mandatory minimum.  You must report the withdrawal on your tax return.  Your tax owed for the year is calculated from all your income, dependents, credits and so on.  You get credit for the amount withheld.  Then if you owe more, you make an additional payment, and if you owe less than was withheld, you get the difference as a refund.

[diesel19914]

It's the first week of March and I am getting the same update answer from Turbotax when I go to file my return.  It says I can mail it in but will take 4-6 weeks.  It seems to me I am not alone in having to use my Retirement money to help get through this COVID pandemic!  A followup answer would be appreciated!

This update is coming soon or not?

Please advise!!

[Opus 17]

Form 8515-E is available and e-filable now.  If you are using the desktop version, make sure your program is updated.  

I have seen a complaint that the required forms can't be e-filed yet for New York State, and possibly other states are affected.  If you are not able to e-file your state return, pay attention to the alert message in the program, it may give you a date or a change to sign up for e-mail notification when it is ready.  If you know a specific form number that can't be e-filed, you can look it up here.

https://ttlc.intuit.com/community/forms/help/state-forms-availability-table-for-turbotax-individual-...