Why does TURBOTAX apply a penalty for qualified coronavirus-related 401K distributions? I took out the $1,500 because of a qualified disaster (COVID-19) under CARES.

[macuser_22]

The TurboTax 8915-E should be available on Feb. 24 (pending IRS approval by then).

The IRS just finalized the form on Feb 11. TurboTax must now submit their 8915-E software to the IRS for testing to be sure that both TurboTax and the IRS -file computer are comparable. That process usually takes the IRS 2-3 weeks for approval to release the new form to the public.

See below for a link to sign up for an email when the form is ready.

This form is necessary to report COVID related distributions from IRA's and other retirement plans to report the distribution, pay it back over 3 years or spread the tax over 3 years.

A COVID-19 related distribution is reported on a new 8915-E form.

See this TurboTax FAQ to sign up for an e-mail when the form is ready.
https://ttlc.intuit.com/community/tax-topics/help/why-am-i-getting-getting-a-10-penalty-on-my-1099-r...

[Jd1776]

FOLLOWING 

[macuser_22]

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@Jd1776 wrote:

FOLLOWING 

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What does that mean?

[Jd1776]

That means I’m following this thread whenever they reply with an answer.

[Chris1970]

Mine sais the same thing. I cannot complete  my taxes because of this. 

[DoninGA]

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@Chris1970 wrote:

Mine sais the same thing. I cannot complete  my taxes because of this. 

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The answer has been posted multiple times on this thread.  Please READ the answers provided.

[Jd1776]

Kind of, originally the form wasn’t available yet, so we have to wait  till about the 25th of this month When it should become available for it to be updated on the application-  BUT now the form is available so… 

[rosehemlock]

This will be supported in the online version by February 25, 2021 according to https://care-cdn.prodsupportsite.a.intuit.com/forms-availability/turbotax_fed_online_individual.html. You are looking for this line: 

Form 8915-E, Qualified 2020 Disaster Retirement Plan Distributions and Repayments (Taxpayer)

[KathrynG3]

Form 8915-E will allow no penalties when reporting distributions from 401(k) retirement accounts. They must be reported evenly over the next 3 years, one third in each year, 2020, 2021, and 2022.

Form 8915-E was only recently approved for electronically filed returns. Our engineers are working hard on updating the program to accommodate the changes and are expected to have the update ready by February 25, 2021, as of this writing.

For more information, see; What is Form 8915-E Qualified 2020 Disaster Retirement Plan Distributions and Repayments?

Until the program is updated, if you wish to proceed, you would have to paper file. The IRS takes at least 6-8 weeks to process a paper filed return and 2-3 weeks to process an electronically filed return.

To paper file your return, see these links:

• How do I print and mail my return in TurboTax Online?
• How do I print my return in the mobile app?
• How do I print and mail a return in the TurboTax for Windows CD/Download software?

[nicollejoy]

There has been no change to the downloaded software.  Please advise when the software that's downloaded will be able to correct the tax rate and remove the penalty for 401k withdrawals due to COVID 19  hardship.  I updated my software and no changes.  This really needs to be fixed.

[DoninGA]

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@nicollejoy wrote:

There has been no change to the downloaded software.  Please advise when the software that's downloaded will be able to correct the tax rate and remove the penalty for 401k withdrawals due to COVID 19  hardship.  I updated my software and no changes.  This really needs to be fixed.

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The Form 8915-E was released as a software update for the TurobTax desktop editions on 02/26/2021

Update your software.

If your software is indicating it is up to date and you are using a Windows PC, use a manual update.

Go to this TurboTax support FAQ for a manual update for Windows - https://ttlc.intuit.com/community/updating/help/manually-update-turbotax-for-windows-software-basic-...

Delete the Form 1099-R and re-enter manually.  The following screens will ask if the withdrawal was due to Covid-19.

[nicollejoy]

Tried manually but it errored out.  I applied all updates upon start.  I may have to uninstall and reinstall the software I get.  Just lose all the entries I've done so far. 

[DoninGA]

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@nicollejoy wrote:

Tried manually but it errored out.  I applied all updates upon start.  I may have to uninstall and reinstall the software I get.  Just lose all the entries I've done so far. 

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You will not lose any tax data entered if you save the tax return before uninstalling.  The tax data file is in a different directory than the TurboTax program.  So when the program is uninstalled the tax data file is not deleted.

The tax data file is in Documents and in the TurboTax folder.

[nicollejoy]

I'm getting an error even trying to install so I can't get the update for the 401k manually or otherwise and I can't do anything to get it. What now?

[DoninGA]

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@nicollejoy wrote:

I'm getting an error even trying to install so I can't get the update for the 401k manually or otherwise and I can't do anything to get it. What now?

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So you already uninstalled the software and are now installing it again?  What error are you receiving?