topic I took a coronavirus distribution... in Retirement tax questions

I took a coronavirus distribution...

ashleymarie0731 — Sat, 30 Jan 2021 19:55:42 GMT

I took a coronavirus distribution from my 401K this year because my children’s school was closed down. I was told this income would not be taxable. I was not working during that time. When I filed though, it made me pay tax on it. Is this correct?

Re: I took a coronavirus distribution...

MaryM428 — Sat, 30 Jan 2021 20:11:34 GMT

Because you were affected by COVID-19, you were permitted to withdraw up to $100,000 from your 401K without paying an early withdrawal penalty.

The income is still taxable, but the penalty for withdrawing the income before the age of 59-1/2 was waived for distributions made by December 30, 2020.

The taxes on the distribution can be spread out over a three year period. You can also put the money back into your retirement plan within three years and undo the tax consequences by filing an amended tax return.

COVID Tax Relief

Re: I took a coronavirus distribution...

lindamisuna — Sat, 30 Jan 2021 20:23:47 GMT

I entered 100% of the distribution expecting to be asked if this was a coronavirus distribution, but I didn't see any reference to it. Should I just enter 33.333% of it?

Re: I took a coronavirus distribution...

DanaB27 — Sat, 30 Jan 2021 22:09:50 GMT

Form 8915 -E, that reports the Coronavirus-related relief measures for retirement plan distributions, is not yet finalized by the IRS. TurboTax will update this section after the IRS releases the final version of Form 8915-E and then you can finish your distribution information.

Please follow these steps to enter your 1099-R:

Login to your TurboTax Account
Click on the Search box on the top and type “1099-R”
Click on “Jump to 1099-R” and you should see the “Your 1099-R Entries” screen
Click "edit" and continue until "Tell us if any of these uncommon situations apply" screen
Select "I took out this money because of a qualified disaster (includes COVID-19)" (TurboTax will walk you through questions once this section is ready)

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 or having work hours reduced because of COVID-19
You’re unable to work due to child care closure or hour reduction because of Covid-19
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.

You can choose to have the distribution taxed over 2020, 2021, and 2022 instead of only in 2020. You’ll have three years to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions. If you pay back the amount within that time, you’ll be able to claim a refund on those taxes paid when you file an amended tax return. Please see IRS Coronavirus-related relief for retirement plans and IRAs for more details.

@lindamisuna

Re: I took a coronavirus distribution...

ashleymarie0731 — Sat, 30 Jan 2021 21:53:44 GMT

Thank you so much! That clears it up for me

Re: I took a coronavirus distribution...

FZ267 — Mon, 01 Feb 2021 21:57:23 GMT

So does this mean now that TurboTax is handling the Covid withdrawal correctly? I didn’t see any where that I could claim the income over three years in pay the taxes over three years.

Re: I took a coronavirus distribution...

JamesG1 — Mon, 01 Feb 2021 22:50:43 GMT

When you claim a qualified COVID-19 disaster during the interview for your 1099-R, TurboTax states:

You will need to revisit this area. The IRS instructions related to disaster distributions were not ready in time for us to include them in this release. Please revisit this area later.

IRS form 8915-E has not been completed as you can see here.

As of this date, there is not a date for completion because the IRS has not completed IRS form 8915-E.

Forms availability can be found here and will report a tentative date when the form will be available in TurboTax.

Re: I took a coronavirus distribution...

Yiverson — Sat, 13 Feb 2021 14:10:26 GMT

Its now Feb 13th and the IRS is accepting returns. When is Turbo Tax going to get the finalized Form 8915 -E so we can file? If people are filing it makes sense that this form is now complete.

Re: I took a coronavirus distribution...

DoninGA — Sat, 13 Feb 2021 14:13:45 GMT

@Yiverson wrote:

Its now Feb 13th and the IRS is accepting returns. When is Turbo Tax going to get the finalized Form 8915 -E so we can file? If people are filing it makes sense that this form is now complete.

The Form 8915-E will be available for e-filing using TurboTax on 02/24/2021

Re: I took a coronavirus distribution...

Yiverson — Sat, 13 Feb 2021 14:21:51 GMT

Thanks!

Re: I took a coronavirus distribution...

ashleymarie0731 — Sat, 13 Feb 2021 14:45:08 GMT

It let me complete and file my taxes. It never said I had to revisit that area.

Re: I took a coronavirus distribution...

daleadams1 — Mon, 15 Feb 2021 20:31:07 GMT

I just started my federal return today on Turbotax and the system advised me to revisit that area. I suspect you will need to file an amended return. Turbotax may help you with that since it seems the system didn't warn you.

Re: I took a coronavirus distribution...

Yiverson — Mon, 15 Feb 2021 20:45:23 GMT

one of the experts told me that turbo tax will have this all set on 2/24

Re: I took a coronavirus distribution...

Anonymous — Mon, 15 Feb 2021 20:48:13 GMT

@Yiverson The IRS still hasn't released this form, so TurboTax can't yet provide it. It is not uncommon at all for the IRS to still be working on forms after filing season opens. Just because they have started accepting some returns doesn't mean they can accept them all. Those people who are affected by items not finalized by the start of the filing system have to wait.

Re: I took a coronavirus distribution...

DaveF1006 — Mon, 15 Feb 2021 20:52:19 GMT

At this point and time the Form 8915-E (Qualified 2020 Disaster Retirement
Plan Distributions and Repayments (Use 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: I took a coronavirus distribution...

Yiverson — Mon, 15 Feb 2021 20:59:32 GMT

Yes I know. please read the previous posts.

Re: I took a coronavirus distribution...

JamesG1 — Mon, 15 Feb 2021 21:10:47 GMT

When you claim a qualified COVID-19 disaster during the interview for your 1099-R, TurboTax states:

You will need to revisit this area. The IRS instructions related to disaster distributions were not ready in time for us to include them in this release. Please revisit this area later.

This TurboTax Help allows you to sign up for notifications for when the IRS form 8915-E is operational.

Forms availability can be found here.

Re: I took a coronavirus distribution...

Yiverson — Wed, 24 Feb 2021 12:43:29 GMT

I see that 8915-E (https://www.irs.gov/pub/irs-pdf/f8915e.pdf) has been released from the IRS, when is Turbo Tax going top have this form ready so we can e-file?

Re: I took a coronavirus distribution...

DianeW777 — Wed, 24 Feb 2021 13:05:30 GMT

It is being prepared for release. Form 8915-E: Qualified 2020 Disaster Retirement Plan Distributions and Repayments, which is used for COVID-related early distributions, will be ready for e-file starting February 25th. It was recently moved out of the draft form by the IRS.

For more information about this form use this link: Qualified 2020 Retirement Distributions due to COVID

Follow the steps below to make sure TurboTax knows you are allowed a penalty waiver.

Login to your TurboTax Account
Click on the Search box on the top and type “1099-R”
Click on “Jump to 1099-R” you should see the “Your 1099-R Entries” screen and will click "edit"
Continue until "Tell us if any of these uncommon situations apply" screen
Select "I took out this money because of a qualified disaster (includes COVID-19)"
Answer the any question.

Re: I took a coronavirus distribution...

FZ2671 — Thu, 25 Feb 2021 13:23:18 GMT

I received two 1099-R forms from my 401(k) company for the Covid withdrawal totaling $95,000. One 1099-R was for the regular 401(k) portion of the withdrawal (about $92,000) and the other 1099-R was for the Roth portion of the withdrawal (about $3000). For some reason, I am able to claim the regular portion as a Covid withdrawal but I cannot claim the Roth portion. It is saying there is the 10% early withdrawal penalty for the Roth portion. Turbotax is not asking me the same questions for each 1099-R when I "edit" them.