How do you get TT to fill out form 8915E correctly, from a 1099R due to a Covid Roth401k distribution?

[phinancialwiz]

This was a Covid related distribution in 2020, box 7 codes were 1B, and box 2a(Taxable Amount) was less than box 1(Gross Distribution) on the 1099R. It seems to work only if I leave box 7 code "B" out and change box 2a to match box 1 amount.

[DMarkM1]

First delete the 1099R to start it over.  Enter the 1099R information from your form but do not enter the "B" in box 7.  Complete the interview to indicate the COVID distribution.  Then "Revisit' the 1099R and put the "B" in box 7.

[phinancialwiz]

Thanks for the response. That does work to get it to take the “B” code, but that doesn’t fix the Total Distribution error. It still uses the box 2a Taxable Amount for my Covid related distribution total.

[DaveF1006]

Have you followed the precise steps listed below. If you do, you should be able to allocate your income over a 3-year period.

1. Go to federal>wages and income>all income
2. Retirement plans and Social Security>show more
3. Ira (401K), pension plan Withdrawals(1099R) Start
4. Here you will enter your 1099R.  After you are done with one and reach a summary screen, there will be an opportunity to enter more 1099's.
   1. Scroll through the next few screens until you reach a screen that says is this a withdrawal due to COVID-19 or a Qualified Disaster Distribution?
   2. You will say yes, this was withdrawn due to COVID 19
   3. Next screen says COVID-19 distribution Here you will indicate that all or some was a COVID 19 withdrawal.
   4. Next will ask about your COVID related stuff.  There is a checkbox that you must answer saying that you were financially impacted by COVID 19. This will waive the early withdrawal penalty.
   5. Then it asks if you repaid the distribution, you can say no unless you did.
   6. Then it asks if you want to pay the tax all the tax this year. leave the check box blank and continue.
   7. This will generate a 8915-E and will spread your taxable amount over a three-year period automatically.           [Edited 03-07-2021|5:17 PM PST]

[phinancialwiz]

Yes, these the are the exact steps/prompts that I followed. At the end there is a screen that states I reported $xxxxx.xxx as a Covid-19 Distribution. And the that I can pay 1/3 of the tax (minus any repayments) or select the box and pay all of the tax this year. I earlier selected to re-pay a portion, I am repaying 1/3 this year. For the 1099R in question (I have 3, only 2 are for the Covid related Distribution), if I enter box 2a correctly- then this page reports the incorrect Covid-19 Distribution and the 1/3 tax amount. If I enter box 2a incorrectly, using the amount from box 1, then when I reach this page these totals are correct. Notes: I have two 1099R’s for the Covid-19 Distribution because Fidelity split the Distribution between Traditional and Toth Contributions. The 1099R that accounts for the Roth contribution portion has different amounts on box 1 and box 2a, because it correctly separates out employer matching funds on the Roth contributions that have been distributed. My guess is that TurboTax is incorrectly using box 2a amount to perform the calculations for the Covid-19 distribution. 

[ReneeM7122]

@phinancialwiz Your estimation does sound correct.  It sounds like the calculation is not correct because you should not have to use the amount from box 1 in box 2a.  But if you were able to make it work correctly by doing so, 

it is an input validation error enforced by the TurboTax software and not an early distribution restriction imposed by the IRS.  It is ok to use the box 1 amount to bypass this input validation until corrected by the team.

About form 8915-E

The CARES Act provides tax relief for up to $100,000 of COVID-19 related distributions from eligible retirement plans. So, if you, your spouse, your dependent, or a member of your household was impacted by the coronavirus and you withdrew from your retirement accounts in 2020 before the age of 59 ½, you may not have to pay the 10% early withdrawal penalty (or the 25% additional tax for SIMPLE IRAs).

When you enter your Form 1099-R, we’ll ask you a few questions to determine your eligibility for the exemption, and complete and include Form 8915-E in your return if you qualify.

To qualify for Form 8915-E and to be exempt from the early withdrawal penalty due to COVID-19, a few rules have to be met.

1. You have to be a qualified individual. To qualify, one of these must be true:

• You, your spouse, or your dependent were diagnosed with COVID-19
• You experienced adverse financial consequences as a result of being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19
• You experienced adverse financial consequences as a result of being unable to work due to lack of child care due to COVID-19, or
• You experienced adverse financial consequences as a result of closing or reducing hours of a business that you own or operate due to COVID-19

2. The withdrawal had to come from an eligible retirement plan, which could be any of the following:

• A qualified pension, profit-sharing, or stock bonus plan (including a 401(k))
• A qualified annuity plan
• A tax-sheltered annuity contract
• A governmental section 457 deferred compensation plan
• A traditional, SEP, SIMPLE, or Roth IRA

3. The distribution had to have been made in 2020 before December 31, 2020.

There is also a $100,000 distribution limit to the exemption. Any distributions over that amount, may be subject to the additional tax.

When do I have to pay taxes on COVID-19 related distributions?

[sunev100674]

Hi Dave, I exactly did this but it did not generate the 8915E. What do I do?

[AmyC]

Those are the steps. You may need to delete your 1099-R then:

1. Log out of your return
   1. Try one or more of the following:
      • Don't use Internet Explorer.
      • Clear cache and cookies,
      • Sign in using a different browser.
      • Sign in using a different device.
2. Log back into your return.
   • Enter the form again.

@sunev100674