Where can I review a plan to pay the CARES act 401k distribution taxes where I am allowed to split it over three years? So far don't see it in File section. Thanks!

[macuser_22]

Enter the 1099-R and answer the COVID questions.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR  Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

[stephanie39]

Thanks @macuser_22  . I did the 1099-R already but there wasn’t anything about splitting the tax over three years - unless yours supposed to manually reduce the amount so that it doesn’t match the 1099-R. There was a note later in the flow about how to set up payment options. I didn’t see any options to split though, even after defining my bank account, etc. Cheers!

[macuser_22]

You have to say it was a COVID related distribution and answer the question that you qualify.    The it will ask if you replaced the money and then if you wan to pay all the tax in 2020.  If you do not check the yes box, it is split over 3 years.

[stephanie39]

Hi @macuser_22 - thanks for your great advice - I appreciate it.

My UI isn’t quite aligned with that though as I see no choice to pay/split the tax in 2020.  Any tips appreciated.

• Chose - Yes, this was withdrawn due to COVID-19.  Description above reads “the tax on the distributions can be spread over three years”
• Chose - All of the distribution was a COVID-19 distribution.
• Entered qualification and it says “You're eligible for the COVID-19 exception”
• Checked - Michael repaid part of the distribution, entered small amount
• (Didn’t matter even if I said none)
• Immediately kicks back to 1099-R overview page.

Still digging... 😀

[macuser_22]

---

@stephanie39 wrote:

Hi @macuser_22 - thanks for your great advice - I appreciate it.

My UI isn’t quite aligned with that though as I see no choice to pay/split the tax in 2020.  Any tips appreciated.

• Chose - Yes, this was withdrawn due to COVID-19.  Description above reads “the tax on the distributions can be spread over three years”
• Chose - All of the distribution was a COVID-19 distribution.
• Entered qualification and it says “You're eligible for the COVID-19 exception”
• Checked - Michael repaid part of the distribution, entered small amount
• (Didn’t matter even if I said none)
• Immediately kicks back to 1099-R overview page.

Still digging... 😀

---

If you are using the CD/download desktop version then you need to update.      That was a bug that was fixed weeks ago.

Delete the 1099-R and re-enter.

If Windows then:

https://ttlc.intuit.com/community/updating/help/what-is-a-manual-update/01/26074?search-action-id=16...

[stephanie39]

I'm on the online SE version.  I worked with their excellent support team last night and it's not clear what's gong on but there are some theories.

1. software is auto-splitting by three years yet gives you zero visibility to confirm this and UI reads "can be spread" not "will be spread".

2. A defect where somehow re-entering the forms (even in Chrome) doesn't sort out.

3. Some obscure reason why I'm ineligible despite the software UI saying I qualify.

I'll call them again today.  One of the proposed workarounds was to paper file.  

That sounds daunting but probably better than clearing and starting over (which probably won't even address this).

Cheers!

[macuser_22 · Accepted solution]

The default is to spread over 3 years.

What is on the 1040 line 5a and 5b?           If spread then 5b will be 1/3 of 5a.

[stephanie39]

Oh, that's interesting.  Thank you.  I'm not sure how to look at those lines but will inquire with Support to verify behavior.

[stephanie39]

@macuser_22 - you are a forum rockstar.  Turbotax support confirmed that it spreads by default and I was able to observe this by going to Tax Tools > Tools > Preview 1040.  It shows the amount splint 1/3 from 5a to 5b.  

PS - Turbotax support team is excellent.  Way above industry average.

PPS - They said if anyone wanted to pay all in one year you'd say at first it was covid disaster related which would wave the 10%, but then say no to the positive test or financial impact questions and theoretically it would allow you to pay it all in one year.  

Thanks.