topic I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do? in Retirement tax questions

I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

AM65 — Fri, 19 Mar 2021 19:41:49 GMT

TurboTax is reporting $16,636 due to COVID. I have entered $14,069.20 due to COVID. I can't figure out how TurboTax arrived at $16,636. I have 3 1099-G's. One out of three is partially due to COVID. One is NOT due to COVID. The third 1099-G is entirely due to COVID. What should I do to rectify the amount due to COVID?

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

macuser_22 — Fri, 19 Mar 2021 19:52:31 GMT

Are yiu asking about 1099-G's or 1099-R's

1099-G report unemployment or other government payments, 1099-R's report retirement distributions.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

AM65 — Fri, 19 Mar 2021 20:01:57 GMT

Apologies-meant to say 1099-R

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

macuser_22 — Fri, 19 Mar 2021 20:10:45 GMT

Just enter the 1099-R's and if you qualify for a COVID related distribution answer yes to the COVID questions and the other COVID questions if you are repaying the amount back to the account or want to spread the tax over 3 years.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

AM65 — Fri, 19 Mar 2021 21:12:44 GMT

I understand that. But the calculation by TurboTax seems incorrect. What can be done to correct the calculation?

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

macuser_22 — Fri, 19 Mar 2021 21:17:33 GMT

@AM65 wrote:

I understand that. But the calculation by TurboTax seems incorrect. What can be done to correct the calculation?

Exactly what is not correct?

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

fanfare — Sat, 20 Mar 2021 01:09:11 GMT

TurboTax Online does not calculate the correct taxable amount of a COVID_related distribution from an IRA with basis if the total distribution amount is over $100,000, whether you pay some of it back or not.

The only thing that can be done is to have TurboTax software development fix the problem(s).

Or find another tax software provider that does it correctly.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

macuser_22 — Sat, 20 Mar 2021 02:36:28 GMT

@fanfare wrote:

TurboTax Online does not calculate the correct taxable amount of a COVID_related distribution from an IRA with basis if the total distribution amount is over $100,000, whether you pay some of it back or not.

The only thing that can be done is to have TurboTax software development fix the problem(s).

Or find another tax software provider that does it correctly.

I see no error. It took a while to understand the 8606 instructions and interactions with the 8915-E form but calculating it the IRS way using the 8606 instructions and 8915-E exactly matched what TurboTax comes up with.

The 8606 instructions example 2 covers this situation and TurboTax is correct. (The $100,000 limit is part of the calculation.)

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

fanfare — Sat, 20 Mar 2021 04:16:00 GMT

@macuser_22

please see this thread

https://ttlc.intuit.com/community/retirement/discussion/8915e-overstates-distributions-on-1040/00/2109409

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

AM65 — Sat, 20 Mar 2021 12:36:52 GMT

In this case, my total IRA distribution was well under $100K, so this comment does not apply to my case.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

fanfare — Sat, 20 Mar 2021 12:41:57 GMT

TurboTax should be asking you how much, if any, of your 1099-R distribution is COVID-related for each 1099 you enter.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

AM65 — Sat, 20 Mar 2021 13:04:56 GMT

Thanks for your post (and for everyone else's post as well). Let me be clear about my case and concern.

None of these withdrawals are early withdrawals and I do not have future plans to pay any of these withdrawals back to myself over time.

I had 3 1099-R's in 2020; each from a different IRA account.

First 1099-R: On Jan 3 2020, the distribution was for $2,566.36 and $256.63 federal tax was withheld. I marked this distribution as NOT COVID-19 related.

Second 1099-R: On Jan 30 2020, Mar 2020, May 2020 and June 2020, $4,085.20 was due to COVID-19 and $4,527.22 was NOT due to COVID-19. A total of $79.72 in federal tax was withheld. I indicated $4,085.20 of the total amount was due to COVID-19 and the rest of the amount was not due to COVID-19.

Third 1099-R: In Aug 2020, Oct 2020 and Dec 2020, $9,984.00 was all due to COVID-19. A total of $859.30 federal tax was withheld. I indicated that the entire amount was distributed as income due to COVID-19.

Why is TurboTax saying that the total amount of distributions due to COVID-19 is $16,636 and thus $5,545.33 could be declared as additional IRA income in 2020, 2021 and 2022?

I thought that TurboTax would compute that my COVID-19 related distributions totaled $14,069.20; thus only $4,689.73 would need to be declared as additional IRA income in 2020, 2021 and 2022... and furthermore, I would have to declare the additional $7,093.58 non-COVID related IRA distribution in 2020 because this amount could not be spread out over 3 years.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

AM65 — Sat, 20 Mar 2021 13:08:57 GMT

Yes, I understand that. TurboTax did ask me to quantify my COVID related distributions. I did so but I still don't think the final reply from TurboTax correctly tallied my 3 year income declaration due to COVID so I now question TurboTax's conclusion as well as the tax refund calculated.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

fanfare — Sat, 20 Mar 2021 13:26:16 GMT

When you use TurboTax Online, you must pay the fee before you can see Form 8915-E, and see the allocation that TurboTax made.

If you see that form and it is wrong, I'm not sure what you can do other than convince dmertz or customer support to enter a bug report.

try a different tax software provider.

So far out of four software packages, I've got four different answers to my situation.

I believe one is correct, but it is not TurboTax.

I'll probably have to file on paper.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

fanfare — Sat, 20 Mar 2021 13:32:04 GMT

combine all three 1099s into one, with a covid part, and a non covid part.

TurboTax should divide the covid part by 3.0, unless you elect otherwise.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

AM65 — Sat, 20 Mar 2021 18:38:30 GMT

Just for kicks I changed my first 1099-R to be COVID related distribution and said that only $1 was COVID related. Sure enough that sort of corrected the bug in TurboTax and got me closer to the correct calculation.

I hope TurboTax sees this little exercise and corrects their program before I get ready to file my taxes this year!

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

dmertz — Sun, 21 Mar 2021 00:05:37 GMT

@AM65 wrote:
I thought that TurboTax would compute that my COVID-19 related distributions totaled $14,069.20; thus only $4,689.73 would need to be declared as additional IRA income in 2020, 2021 and 2022... and furthermore, I would have to declare the additional $7,093.58 non-COVID related IRA distribution in 2020 because this amount could not be spread out over 3 years.

This is exactly the result I get on Form 8915-E when I make the entries as you stated. Adding the $7093 of non-CRD distributions results in $11,783 on Form 1040 as expected.

It seems that somehow you indicated that the $2,466.36 distribution was a CRD. Delete and reenter that Form 1099-R.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

AM65 — Sun, 21 Mar 2021 15:24:28 GMT

Thanks for your suggestion to delete and add the initial distribution. That did the trick! I recall that when I initially added the distribution, I indicated it as a CRD but I also explicitly recall changing the CRD status to non-CRD. I guess that status switch did not get applied correctly so deleting and re-adding would have been the correct workaround. I believe this to be a bug that should be fixed and folks should be aware of this issue until it is fixed in the online version of TurboTax.

Re: I have indicated an IRA Distribution partially due to COVID yet TurboTax seems to be coming up with an incorrect amount based on my input. What should I do?

macuser_22 — Sun, 21 Mar 2021 15:58:59 GMT

@AM65 wrote:

Thanks for your suggestion to delete and add the initial distribution. That did the trick! I recall that when I initially added the distribution, I indicated it as a CRD but I also explicitly recall changing the CRD status to non-CRD. I guess that status switch did not get applied correctly so deleting and re-adding would have been the correct workaround. I believe this to be a bug that should be fixed and folks should be aware of this issue until it is fixed in the online version of TurboTax.

Some answers go on different forms. Simply repeating the interview and bypassing that question down not changed the original answer on the form. Editing the form is not a "reset" - deleting the form is.

Re: IRA Distribution partially due to COVID, TurboTax incorrectly calculating taxable amount

MickeyM00se — Thu, 01 Apr 2021 13:33:41 GMT

I believe I have encountered the same issue with TurboTax Premier (Windows), and it's got to be a bug. An IRA distribution that's only partially due to COVID should result in a taxable amount for 2020 that is LESS than the total IRA distribution, but TurboTax is reporting a taxable amount that's HIGHER than the total IRA distribution. (This is for a distribution well under $100k, by the way - others have reported bugs for large distributions.)

The correct formula would be: taxable amount for 2020 = [non-COVID portion] + [1/3 of COVID portion]

The formula they seem to be using is: taxable amount = [entire distribution] + [1/3 of COVID portion]

I verified what was happening by changing back and forth in the interview between "not due to COVID at all", "fully due to COVID", and "partially due to COVID", and each time I switched to forms-view and looked at my 1040. It was very clear that when "partially due to COVID" was selected, TurboTax added 1/3 of the COVID portion to the ENTIRE distribution amount instead of adding it to the non-COVID portion. Here are the numbers (for a distribution of $11,000.. the taxable amount is from line 4b of the 1040..)

None of distribution is due to COVID.. taxable amount, $11000.. correct.

All of distribution is due to COVID... taxable amount, $3667.. correct (rounding error ok)

$6000 of the $11000 distribution is due to COVID... taxable amount, $13000.. WRONG! (s/b $7000)

$10999 of the $11000 distribution due to COVID.. taxable amount $14666.. WRONG! (s/b $3667.33)

If I subsequently tell the interview that all of the distribution is due to COVID, TurboTax corrects itself and restores the correct number ($3667) to the 1040.. so I don't believe I need to delete and re-add my 1099. But I would very much like to have TT properly calculate the taxable amount for a partial COVID-related distribution (I'd edit the forms manually but I don't like overriding calculated numbers and I can't tell where TT is doing the actual math..)

(I uploaded the latest version of TT and re-checked all the above before posting this message. Version number is [phone number removed].) Edited to say: it's NOT a phone number, it's a version number! Lets try again.. 020 dot 000 dot 1690