Early IRA distribution under CARES act

[Burny]

I took an early IRA distribution under the CARES act due to COVID-19.

I would like to spread the tax over 3 years as allowed under CARES.

How do I enter this in Turbotax Premier? Is this functionality supported yet? 

So far, I do not see any questions that allow to classify early distribution under CARES to avoid early withdrawal penalty - 

nor a question whether to split tax over 3 years.

I know it's still early - I'm self-employed and trying to get an estimate for 2020 and decide whether to made final estimated tax payment in January.

Any help is appreciated.

Thanks!

[dmertz]

This has not yet been implemented in 2020 TurboTax.  When implemented, you can expect it to behave similarly to the way the reporting of hurricane and wildfire disaster distributions was done in the past.

If you plan on spreading the income over 3 years, for estimated-tax planning purposes you could try entering a code 2 Form 1099-R for a distribution of 1/3 of the actual amount of the distribution.  (The maximum CRD is $100,000, so any actual amount distributed beyond $100,000 that would need to be entered separately with code 1).  This form will have the amount in boxes 1 and 2a, box 2b Taxable amount not determined marked, code 2 in box 7, the IRA/SEP/SIMPLE box marked, and any taxes withheld in the boxes for federal and state tax withholding.

[leuchtmannw]

i took an early distribution from my IRA due to COVID-what code do i use when entering by 1099R-?

Merrill Lynch put code 1 in the box 7, can I insert code 2 saying "with Exception"-however there is nothing about the CARES act or COVID as an explanation, I dont want to make a mistake and be audited so please make sure your answer is correct-thank you so much

[CatinaT1]

You will report this on a Form 8915-E.  The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act.  So this form cannot be included in the TurboTax program.  You will not be able to proceed until the form is available.

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

We estimate it will be sometime in February 2021 before the form is available.  You can watch this link for the form availability.  Currently, the form is not listed here since there is no estimated date.  Once there is, you will find the form listed with the date available.  

IRS forms availability table for TurboTax individual (personal) tax products

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

[leuchtmannw]

Hi

any idea when this form for early withdraw due to COVID will be available 

please advise

thank You 

[DoninGA]

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@leuchtmannw wrote:

Hi

any idea when this form for early withdraw due to COVID will be available 

please advise

thank You 

---

 This form has not been finalized by the IRS for filing with a 2020 federal tax return.  The IRS has not announced when this form will be available.  Once available it will be included in the TurboTax software.

We estimate the form may be available sometime in February.

[463046]

how do i complete my taxes wiyh turbo showing 10% penalty

[CatinaT1]

You will report this on a Form 8915-E.  The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act.  So this form cannot be included in the TurboTax program.  You will not be able to proceed until the form is available.

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

We estimate it will be sometime in February 2021 before the form is available.  You can watch this link for the form availability.  Currently, the form is not listed here since there is no estimated date.  Once there is, you will find the form listed with the date available.  

IRS forms availability table for TurboTax individual (personal) tax products

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

Please sign-up here and we will email you once the form is live.

[pepper]

I can see the form on the IRS website, when do we expect to be able to enter this info in TT?  I just tried it this evening and I didn't see a reference to it when editing my SEP withdrawal.  Thanks!

[PattiF]

At this point in time the Form 8915-E (Qualified 2020 Disaster Retirement
Plan Distributions and Repayments (Used for Coronavirus-Related Distributions)) is not finalized.

The 8915-E Form is projected to be e-fileable starting 02/24/2021

Please sign-up here and we will email you once the form is live.

[stirfry84]

Will form 8915-E be added to the Free File version on the same timeline?

I have currently indicated in my return that the early distribution was taken for "Other Reasons", but I'm not sure where to find that selection and remove it once the Form 8915-E is available.

[SamS1]

Yes. Form 8915-E: Qualified 2020 Disaster Retirement Plan Distributions and Repayments, which is used for COVID-related early distributions, will be e-fileable starting 2/24.  The IRS is updating form 5329’s instructions to make it clear that COVID related exceptions cannot use 5329 and should use the new 8915-E.  While there income qualifications to access the TurboTax FreeFile program, all the form available in regular TurboTax will be available in FreeFile.  Click here to be added to the email list when the form is available in TurboTax.

To access your 1099R, after you have logged in and are in your return:

• Go to Search at the top of the screen.
• then enter Form 1099-R in the search box. 
• You will see a Jump To function that will take you to the 1099-R input screens. 
• There select the 1099-R you are working on and continue through the screens to the penalty waiver section.  Remove the "Other" penalty waiver reason.

The pandemic has affected your taxes in many ways. Including reporting in TurboTax the amount of stimulus money you received. Click Here for more information on how the Pandemic affected your 2020  taxes.

[pepper]

Thanks!  I am using the Home & Business version, so I hope that will be updated.  Do you know if TT will guide me through the Cares Act exemption or will I need to manually fill out the form? 

[PattiF]

TurboTax will guide you through filling out Form 8915-E to receive the CARES Act exemption. The program will ask the questions in a understandable and logical way.

[phillipweiss]

Looks like the form 8915-E will be available via Turbotax on 2/25/2021. Thank you.