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jeffry-d-olson
New Member

When will the software accept the Covid 19 reason for avoiding the 10% penalty and spreading out the tax

 
2 Replies
DanaB27
Expert Alumni

When will the software accept the Covid 19 reason for avoiding the 10% penalty and spreading out the tax

Form 8915 -E, that reports the Coronavirus-related relief measures for retirement plan distributions, is not yet finalized by the IRS. TurboTax will update this section after the IRS releases the final version of Form 8915-E and then you can finish your distribution information.

 

 Please be aware that the IRS currently won't start processing returns until February 12, 2021.

 

Please follow these steps to enter your 1099-R:

  1. Login to your TurboTax Account 
  2. Click on the Search box on the top and type “1099-R”
  3. Click on “Jump to 1099-R” and you should see the “Your 1099-R Entries” screen
  4. Click "edit" and continue until "Tell us if any of these uncommon situations apply" screen
  5. Select "I took out this money because of a qualified disaster (includes COVID-19)" (TurboTax will walk you through questions once this section is ready)

 

 

Those who qualify as individuals directly impacted by the pandemic will be able to withdraw up to $100k from their retirement accounts without facing the 10% early withdrawal penalty.

 

You qualify if:

  • You, your spouse, or your dependent are diagnosed with COVID-19
  • You experience adverse financial consequences as a result of being quarantined, furloughed, or laid off or having work hours reduced because of COVID-19
  • You’re unable to work due to child care closure or hour reduction because of Covid-19
  • You experience adverse financial consequences as a result of closing or reducing hours of a business that you own or operate due to SARS-CoV-2 or COVID-19.

 

You can choose to have the distribution taxed over 2020, 2021, and 2022 instead of only in 2020. You’ll have three years to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions. If you pay back the amount within that time, you’ll be able to claim a refund on those taxes paid when you file an amended tax return. Please see IRS Coronavirus-related relief for retirement plans and IRAs for more details.

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Opus 17
Level 15

When will the software accept the Covid 19 reason for avoiding the 10% penalty and spreading out the tax

There has been no official word from the IRS or Turbotax.  However, Intuit is telling users of their software for tax professionals that the form will be available on February 12, and that it won't be able to be e-filed.  If the IRS keeps to that schedule, it should be programmed in Turbotax within 1-2 weeks.  Of course, the IRS can also change their schedule at any time. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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