topic Early IRA distribution under CARES act in Retirement tax questions

Early IRA distribution under CARES act

Burny — Tue, 29 Dec 2020 12:30:24 GMT

I took an early IRA distribution under the CARES act due to COVID-19.

I would like to spread the tax over 3 years as allowed under CARES.

How do I enter this in Turbotax Premier? Is this functionality supported yet?

So far, I do not see any questions that allow to classify early distribution under CARES to avoid early withdrawal penalty -

nor a question whether to split tax over 3 years.

I know it's still early - I'm self-employed and trying to get an estimate for 2020 and decide whether to made final estimated tax payment in January.

Any help is appreciated.

Thanks!

Re: Early IRA distribution under CARES act

dmertz — Tue, 29 Dec 2020 13:43:22 GMT

This has not yet been implemented in 2020 TurboTax. When implemented, you can expect it to behave similarly to the way the reporting of hurricane and wildfire disaster distributions was done in the past.

If you plan on spreading the income over 3 years, for estimated-tax planning purposes you could try entering a code 2 Form 1099-R for a distribution of 1/3 of the actual amount of the distribution. (The maximum CRD is $100,000, so any actual amount distributed beyond $100,000 that would need to be entered separately with code 1). This form will have the amount in boxes 1 and 2a, box 2b Taxable amount not determined marked, code 2 in box 7, the IRA/SEP/SIMPLE box marked, and any taxes withheld in the boxes for federal and state tax withholding.

Re: Early IRA distribution under CARES act

leuchtmannw — Mon, 25 Jan 2021 15:39:20 GMT

i took an early distribution from my IRA due to COVID-what code do i use when entering by 1099R-?

Merrill Lynch put code 1 in the box 7, can I insert code 2 saying "with Exception"-however there is nothing about the CARES act or COVID as an explanation, I dont want to make a mistake and be audited so please make sure your answer is correct-thank you so much

Re: Early IRA distribution under CARES act

CatinaT1 — Mon, 25 Jan 2021 15:47:36 GMT

You will report this on a Form 8915-E. The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act. So this form cannot be included in the TurboTax program. You will not be able to proceed until the form is available.

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

We estimate it will be sometime in February 2021 before the form is available. You can watch this link for the form availability. Currently, the form is not listed here since there is no estimated date. Once there is, you will find the form listed with the date available.

IRS forms availability table for TurboTax individual (personal) tax products

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

Re: Early IRA distribution under CARES act

leuchtmannw — Fri, 05 Feb 2021 14:04:29 GMT

any idea when this form for early withdraw due to COVID will be available

please advise

thank You

Re: Early IRA distribution under CARES act

DoninGA — Fri, 05 Feb 2021 14:05:32 GMT

@leuchtmannw wrote:

Hi

any idea when this form for early withdraw due to COVID will be available

please advise

thank You

This form has not been finalized by the IRS for filing with a 2020 federal tax return. The IRS has not announced when this form will be available. Once available it will be included in the TurboTax software.

We estimate the form may be available sometime in February.

Re: Early IRA distribution under CARES act

463046 — Mon, 08 Feb 2021 03:49:23 GMT

how do i complete my taxes wiyh turbo showing 10% penalty

Re: Early IRA distribution under CARES act

CatinaT1 — Mon, 08 Feb 2021 13:13:43 GMT

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

IRS forms availability table for TurboTax individual (personal) tax products

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

Please sign-up here and we will email you once the form is live.

Re: Early IRA distribution under CARES act

pepper — Thu, 18 Feb 2021 01:33:23 GMT

I can see the form on the IRS website, when do we expect to be able to enter this info in TT? I just tried it this evening and I didn't see a reference to it when editing my SEP withdrawal. Thanks!

Re: Early IRA distribution under CARES act

PattiF — Thu, 18 Feb 2021 01:41:46 GMT

At this point in time the Form 8915-E (Qualified 2020 Disaster Retirement
Plan Distributions and Repayments (Used for Coronavirus-Related Distributions)) is not finalized.

The 8915-E Form is projected to be e-fileable starting 02/24/2021

Please sign-up here and we will email you once the form is live.

Re: Early IRA distribution under CARES act

stirfry84 — Thu, 18 Feb 2021 20:47:05 GMT

Will form 8915-E be added to the Free File version on the same timeline?

I have currently indicated in my return that the early distribution was taken for "Other Reasons", but I'm not sure where to find that selection and remove it once the Form 8915-E is available.

Re: Early IRA distribution under CARES act

SamS1 — Thu, 18 Feb 2021 21:03:42 GMT

Yes. Form 8915-E: Qualified 2020 Disaster Retirement Plan Distributions and Repayments, which is used for COVID-related early distributions, will be e-fileable starting 2/24. The IRS is updating form 5329’s instructions to make it clear that COVID related exceptions cannot use 5329 and should use the new 8915-E. While there income qualifications to access the TurboTax FreeFile program, all the form available in regular TurboTax will be available in FreeFile. Click here to be added to the email list when the form is available in TurboTax.

To access your 1099R, after you have logged in and are in your return:

Go to Search at the top of the screen.
then enter Form 1099-R in the search box.
You will see a Jump To function that will take you to the 1099-R input screens.
There select the 1099-R you are working on and continue through the screens to the penalty waiver section. Remove the "Other" penalty waiver reason.

The pandemic has affected your taxes in many ways. Including reporting in TurboTax the amount of stimulus money you received. Click Here for more information on how the Pandemic affected your 2020 taxes.

Re: Early IRA distribution under CARES act

pepper — Thu, 18 Feb 2021 22:39:30 GMT

Thanks! I am using the Home & Business version, so I hope that will be updated. Do you know if TT will guide me through the Cares Act exemption or will I need to manually fill out the form?

Re: Early IRA distribution under CARES act

PattiF — Thu, 18 Feb 2021 22:48:36 GMT

TurboTax will guide you through filling out Form 8915-E to receive the CARES Act exemption. The program will ask the questions in a understandable and logical way.

Re: Early IRA distribution under CARES act

phillipweiss — Thu, 25 Feb 2021 05:55:02 GMT

Looks like the form 8915-E will be available via Turbotax on 2/25/2021. Thank you.

Re: Early IRA distribution under CARES act

stirfry84 — Sun, 28 Feb 2021 18:33:43 GMT

Soon to be March. Any word yet on when 8915-E will be incorporated?

-- Never mind, I see it's there already.

Re: Early IRA distribution under CARES act

pepper — Sun, 28 Feb 2021 18:35:45 GMT

I've been told its been implemented. I haven't looked yet.

Re: Early IRA distribution under CARES act

Irene2805 — Mon, 01 Mar 2021 16:44:01 GMT

Form 8915-E is available in TurboTax CD/Download and Online versions

Please make sure your program is up-to-date. In TurboTax CD/Download, you will be prompted to download any updates available when you open the program. You can also update the program while you have it open by following these steps:

Click on the Online link in the black bar at the top of the page.
Click on Check for Updates.
TurboTax will download and install any updates available. If there aren't any updates, you will receive the message "Your software is up to date."

TurboTax Online automatically updates the website when the forms become available.

Be sure you go through the 1099R entry screens again. In the screens following the 1099-R entry screen:

You will see a series of questions to see if you are exempt from the additional taxes on early withdrawals [Screenshot #1, below]; and
You will be asked if you want to pay all the tax this year of just 1/3, with the rest reported over the next two years. [Screenshot #2] Check the box if want to pay tax on the entire retirement distribution in 2020.

Screenshot #1

Screenshot #2

@pepper

@stirfry84

Re: Early IRA distribution under CARES act

pepper — Sun, 09 May 2021 17:04:42 GMT

I received $20,000 as an early withdrawal from my SEP due to Covid hardship during 2020. After Jan 1, 2021 I repaid $10,000 of that early withdrawal. Where do I record this? It is not on my 1099 and I have been told I am not receiving anything from my SEP provider regarding the repayment. It appears that if I open up Form 8915-E, I can record the repayment on line 18. Does this seem correct?

Re: Early IRA distribution under CARES act

ColeenD3 — Sun, 09 May 2021 21:38:59 GMT

You do not record any repayments made in 2021 on your 2020 tax return. Every year is separate.