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bigrod7681
New Member

Why was i taxed again on my 1099-R when I wasn't supposed to be penalized due to covid 19 disaster?

 
5 Replies
HelenC12
Expert Alumni

Why was i taxed again on my 1099-R when I wasn't supposed to be penalized due to covid 19 disaster?

@bigrod7681 You won't be able to enter your COVID-19 related 1099-R just yet.  You'll need to revisit this area. The IRS instructions related to disaster distributions weren't ready in time for us to include them in this release. Please revisit this area later. 

 

  • Type 1099-R in the search bar and select Jump to 1099-R.
  • Continue with the onscreen interview until you get to the Tell us if any of these uncommon situations apply screen, scroll down to I took out the money because of a qualified disaster (includes COVID-19).

 

The 10% additional tax on early distributions does not apply to any coronavirus-related distribution. 

Your 1099-R distribution is taxed over 2020, 2021, and 2022. You’ll have that time to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions, and if you pay back the amount within that time, you’ll be able to claim a refund on those taxes. 

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
  • You had work hours reduced to COVID-19
  • You’re unable to work due to child care closure or hour reduction

As things change, TurboTax is continually updated and able to handle every situation that arises to ensure your taxes are done right, so you’ll receive your maximum refund.

2020 1099-R Covid 19 Tell us if any of these uncommon.png

[Edited 2/3/2021|1:12 pm PST]

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LinaJ2020
Expert Alumni

Why was i taxed again on my 1099-R when I wasn't supposed to be penalized due to covid 19 disaster?

The issue has been submitted and is currently under investigation.  Please click on the following link and sign up for an email notification when it's fixed.  

 

Form 8915-E

 

Thank You for your patience

 

If you are under age 59 1/2, the distribution from the retirement plan is considered as an early withdrawal.  Generally, you will pay both regular tax and an additional 10% penalty of your entire distribution unless you met certain criteria.  Due to the CARES Act, if your retirement distribution is related the Covid-19, you will not be liable for this additional penalty.  You will still pay the normal taxes like your wages and income.  For more information from the IRS, click here: Covid Relief.  If your distribution is not related to the Covid, you will need to pay the penalty.  

 

@bigrod7681

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LisaV3
Returning Member

Why was i taxed again on my 1099-R when I wasn't supposed to be penalized due to covid 19 disaster?

My TurboTax software says it has the latest updates and the screens shown in this post do not match what I have.   I need to claim the waiver for early retirement withdrawal.   So how do I do it?  

LisaV3
Returning Member

Why was i taxed again on my 1099-R when I wasn't supposed to be penalized due to covid 19 disaster?

To claim the waiver of the early withdrawal penalty, do I put it under "Other" on this screen that asks "Did you use your IRA to pay for any of these expenses?" or do I check Yes on the page that asks "Were you affected by a natural disaster in 2020?" or both.

 

How do I spread the taxable amount over three tax years?

 
 
 

 

ReneeM7122
Level 9

Why was i taxed again on my 1099-R when I wasn't supposed to be penalized due to covid 19 disaster?

There is a special form that the IRS has released for early distributions on retirement plans due to COVID.

The Coronavirus-related relief measures for retirement plan distributions have to be reported on Form 8915-E which will be ready for e-file on February 25. 

 

@LisaV3

 

 

 

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