How do I claim a 1099-R from a Cares Act 401k withdrawal? I do not see an option to spread it over three years as the IRS site claims.

[Spitzmi1]

want to spread IRA distribution over 3 years and pay the taxes over three years. How do I do it?

[CatinaT1]

There will be a question regarding this after the 1099-R is entered.  First it will ask questions to determine if it is an eligible Covid related distribution, then you will be asked if you want to have it all taxed now or over 3 years.

[Referee]

I saw the option last week to spread income over three years but I elected to pay all taxes this year.  I have not filed yet.  Over the weekend I changed my mind but I am no longer being provided with the option/question to pay over 3 years.  How do I switch back?

[DawnC]

Do a search for 1099-R and then used the Jump to 1099-R link to be taken to your retirement income summary.    On the summary screen, scroll to the bottom of the screen, and click on either Done or Continue.   You will be asked about prior year disaster distributions and then you will eventually come to the option to spread the tax over 3 years.   The default setting is to spread the tax but if you already told TurboTax you want to pay all the tax in 2020, you will have to click on the checkmark in the box to remove it.   Once the checkmark is removed, TurboTax will generate Form 8915-E and make the election to pay the tax in 2020-2022.   

To spread the tax, uncheck the box when you get to the screen below.     @Referee

[Referee]

Thanks DawnC but the option to spread income over 3 years still does not show.  I get the Here’s your 1099-R Info screen.  I click on continue and answer the disaster distribution question.  The next screen takes me to the main income screen listing all of the different types.

[AmyC]

Follow these steps:

1. Return to the 1099-R, edit/update
2. Box 1 gross distribution
3. Box 2 taxable amount, enter the full amount
4. Box 7, code 1
5. taxes withheld
6. continue
7. About the Money... continue
8. Answer IRA, Safety Officer, continue
9. Select your state, continue
10. Where Is this Distribution from? Neither of the above, continue
11. What did you do? Something else, continue
12. Periodic payments? No, continue
13. Was this COVID? Yes, COVID, continue
14. How much? Enter all or portion, continue
15. Receive before Dec 30? Yes
16. Did you or dependents test positive? answer
17. Did you have reduction in income or other on the list? answer, continue
18. Did you repay any? answer, continue

@Referee

[Nuhler]

The option to pay over 3 years is not available. It is not a question to answer. 

[macuser_22]

It does not actually say to spread over 3 years, the question asks if you want to pay it all in 2020.   Not checking the "yes" box automatically spreads it over 3 years.

[meliss20072011]

• Hi, were you able to figure what box to check to distribute the income over 3 years? I have read through this entire thread and am still not able to find it. 

[macuser_22]

Delete the 1099-R and 8915-E form and re-enter the 1099-R and answer yes to the COVID related question.

https://ttlc.intuit.com/community/accessing/help/how-do-i-view-and-delete-forms-in-turbotax-online/0...

[ConfusedTaxpayer100]

I had a COVID-19-related 401(k) withdrawal taken in 2020 that will default this year (2022), will I have the option to pay the taxes over a three-year period? Or should I plan my withholdings to account for the full disbursement to be taxed all at once on next year's taxes? 

[RobertB4444]

@ConfusedTaxpayer100  Based on your question I believe that you took a loan out from your 401K in 2020 and that in 2022 you will default on the loan and it will become a distribution effective this year.

In that case the distribution is fully taxable in 2022 as of this time.  The option to distribute the taxes on a withdrawal from your retirement plan over three years expired at the end of 2020 and there have thus far been no indications that it will come back.  While it is always possible that congress will change its course and reinstate the three year option you should plan on paying all of the taxes on your distribution - as well as a 10% early withdrawal penalty if it applies - with your 2022 tax return.

[ConfusedTaxpayer100]

I am under 59 (under 40, in fact) - is there any way the penalty does not apply? If the penalty applies, how does that work at this point - does it effectively increase my federal taxes by $100 per $1,000 withdrawn?

[RobertB4444]

There are several exceptions to the early withdrawal penalty although they are pretty narrow.

Here is a list of the exceptions.

If you don't qualify for one of the exceptions then it is indeed $100 for every one thousand that you withdrew.

[peter1770]

Hi, I took out a coronavirus-related 401k early distribution in 2020 under the CARES ACT and decided to spread the taxes over 3 tears.  What steps do I follow when filling my 2021 taxes on Turbo Tax to report this 401k distribution?  I know when filing my taxes in 2020 I had to submit Form 8915-E.  Does this form need to be submitted again in 2021?