topic Qualified Disaster in Deductions & credits

Qualified Disaster

kb52 — Sat, 11 Apr 2020 17:33:41 GMT

I have a home that was subject to a Qualified Disaster twice in 2019...I took an IRA distribution to help pay for repairs...can I get credit and how for the distribution without paying taxes on the entire amount? How do process it within TurboTax?

Re: Qualified Disaster

KarenM90 — Sat, 11 Apr 2020 18:40:29 GMT

Yes, once you enter your 1099R be sure to go all the way through the section after you enter the 1099R and answer all the questions.

Once you see the 1099R summary keep going through the questions. There will be questions about Qualified Disaster payments related to the 1099R.

Re: Qualified Disaster

kb52 — Sat, 16 May 2020 16:15:57 GMT

Thanks for the information...I've done that....when I run the Federal Tax review TurboTax says it can't complete the return waiting for additional instructions from the IRS....thoughts?

Re: Qualified Disaster

macuser_22 — Sat, 16 May 2020 17:14:53 GMT

@kb52 wrote:

Thanks for the information...I've done that....when I run the Federal Tax review TurboTax says it can't complete the return waiting for additional instructions from the IRS....thoughts?

If a 2019 disaster then that will require the new 8915-C or 8915-D forms that the IRS as not provided yet. They do not exist, even as a draft form yet. Probably because of the Corona virus shutdown. Usually, once the IRS has a draft form it usually takes 2-3 months before the electronic form specifications are made available.

Re: Qualified Disaster

Carl — Sat, 16 May 2020 18:55:52 GMT

can I get credit and how for the distribution without paying taxes on the entire amount?

The "correct" root answer to your question is no. A withdrawal from a traditional IRA or 401(k) is taxable income with no exceptions. Period. However, situations that allow for an early withdrawal will exempt you from paying the 10% early withdrawal penalty if otherwise applicable. But the withdrawal itself is always taxable income and it does add to your AGI in the tax year of the withdrawal.

So the penalty can be waived. But the taxability of the money is never waived.... at least it never has been yet.

Finally, whatever you spend the money on "may" qualify for a tax deduction or exemption of some type. But the withdrawal itself is taxable income as reflected on the 1099-R you received for that withdrawal.

Re: Qualified Disaster

macuser_22 — Sat, 16 May 2020 19:21:42 GMT

While taxable, a qualified disaster allows you to spread the tax over 3 years and/or be able to repay the money back to the account without penalty or any tax.