topic Inherit IRA Question in Get your taxes done using TurboTax

Inherit IRA Question

SN2674 — Thu, 13 May 2021 18:55:00 GMT

I took out money from my mom's IRA (inherited after she passed) - even though there wasn't a required RMD for 2020 I still took it since I needed the money (unemployed). Is this still considered an RMD? If so, how do I know if this was the normal full amount or just a partial? Lastly, what is considered "Withdrawn due to Covid-19"?

Re: Inherit IRA Question

macuser_22 — Thu, 13 May 2021 19:41:35 GMT

Just say that none of it was a RMD.

A COVID related distribution was necessary for one of the following reasons:

You are diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention;

Your spouse or dependent is diagnosed with SARS-CoV-2 or with COVID-19 by a test approved by the Centers for Disease Control and Prevention;

You experience adverse financial consequences as a result of being quarantined, being furloughed or laid off, or having work hours reduced due to SARS-CoV-2 or COVID-19;

You experience adverse financial consequences as a result of being unable to work due to lack of child care due to SARS-CoV-2 or COVID-19; or

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.

Re: Inherit IRA Question

fanfare — Thu, 13 May 2021 20:07:03 GMT

Since you needed the money, you don't need to worry about COVID.

BUT,

if you were affected by COVID, you have an option to pay back what you took out within three years and get a refund of the tax.

If you were not affected, Never Mind.

Re: Inherit IRA Question

SN2674 — Thu, 13 May 2021 21:27:34 GMT

I took it out because I became unemployed due to Covid - I already had Federal and State tax withheld (15% and 5%) on the $1500 distribution. I'm confused as to what I need to "pay back". Not concerned about paying back any tax already paid on the distribution, just don't want to get taxed twice.

Re: Inherit IRA Question

fanfare — Fri, 14 May 2021 19:19:27 GMT

@SN2674

you are not required to pay back anything.

If you took money from your IRA, pay the tax due and that's the end of it, just as in any other year.

Re: Inherit IRA Question

fanfare — Fri, 14 May 2021 19:22:49 GMT

@SN2674

If you mention COVID, TurboTax by default will try to split your tax over three years.

you should decline that option.