Indiana state tax for cares act 401k withdrawal

[HoosierMikeNWI]

Under the CARES act, I took a distribution from my 401k.  On my FED return.. I entered that with my 1099-R.  Moving to my Indiana tax,  there is a form that states Indiana and the Feds treat things differently..  and there is a line for the "Coronavirus related retirement distributions"...  Is that where I reenter what was on my 1099-R?  I would have thought that it would bring all that over from the FEDs..

[ErnieS0 · Accepted solution]

TurboTax should automatically add this amount to your Indiana tax return if you completed the coronavirus section of TurboTax. If not, enter the amount.

Indiana says:

Section 2202(a)(5) of the CARES Act permits an individual to elect inclusion of CARES Act distributions over a three-year period.

Indiana has not adopted that provision permitting the election. Thus, Indiana will require full inclusion of any distribution in the year of distribution.

However, future inclusions will be deductible in determining Indiana adjusted gross income. For purposes of applying the state of inclusion rules under 4 U.S.C. 114, the state of residence at the time of distribution will be used.

Related Reference:

• Internal Revenue Code Provisions Not Followed by Indiana andClarification of Related Issues

[HoosierMikeNWI]

ErnieS0,

Hmm.. your screen shot is a bit different than what I posted and what I see in TurboTax Premier.  That said... I do agree that my 1099-R tagged to my Federal return is posted to my Indiana State return.. because if I adjust the 1099-R amount.. I see the state tax change.     Also.. on my FED return, I selected to pay 100% of the tax on this return so it does not need to adjust anything for the state.   I will triple check before submitting. 

and if I re-enter the distribution amount on the Indiana State area.. the tax nearly doubles..

Thanks much.

[JoannaB2]

Yes.  Yes that's where you enter Indiana adjustment. Not all states conform to federal ruling on Corona-virus related 401k withdrawals which includes State of Indiana. To make adjustment on Indiana return:

• In Turbo Tax  home screen, left side, select State.
• Under "Your state return" tab, select Indiana, click continue.
• Keep going and answer all  interviews until you see "Your 2020 Indiana taxes are ready for us to check".
• Scroll down, select Income and Deductions, click start/edit.
• Under "Here's the income Indiana handles differently, select Miscellaneous.
• Under Miscellaneous, scroll down and select Other Federal/State differences, click start.
• Under Indiana and Federal Tax Differences, enter the 401 distribution due to corona-virus on "Corona-Virus Related Distributions" box.

[HoosierMikeNWI]

JoannaB2 (et all),

I apologize if I am not being clear.  So.. Line 1 on my IN IT-40 is "Federal AGI".  That figure already includes 100% of the value that was listed on my 1099-R as I selected the box to pay all the tax this year.    So.. if I follow what you suggest and enter my 1099-R value in the "Coronavirus-Related Retirement Distributions"    I see that figure reflected in Line 2 Indiana Add Backs.    As Line 1 and Line 2 are added together to form Line 3, I have now included my 1099-R value TWICE, so Line 7, Indiana Adjusted Gross Income is over stated.   I have proven this by going back to my FED return, removing my 1099-R and then see my IN IT-40 "Federal AGI" get reduced.

Am I missing something..   Can you show me where it is NOT being doubled into my IN AGI?

Something else that is very interesting is while in the IN State section .. I see this statement.. is not accurate, as I have selected to pay 100% of tax owed this year.

As is reflected by this

[JoannaB2]

Yes, you enter it on your Indiana return as negative of the amount that was added back to your Indiana return.

[HoosierMikeNWI]

JoannaB2,

I am on the phone with support..  Putting a negative in is not correct either.     What is interesting is if I go to the FED and say .. YES .. I want to pay this over three years...  then when I go to my state form.. it DOES correctly add back the other 2/3 .. effectively putting my IN AGI back to the proper amount..  but then it messes up my FED return.

I am near certain that answer is.. since I am paying 100% of the tax on the amount.. then enter NOTHING within that state field..   but I do not know if there are other tax implications doing that..

OHH MY .. such fun.

[HoosierMikeNWI]

Final answer..   While those fields on the Indiana State for are "editable", the are NOT intended for user entry.  This was proven by going back to my FED form .. unchecking the "pay all" check box .. and then going back to the state and seeing the other 2/3s value on that form.

While in hindsight that may be clear.. it was not when I posted the question.. and some replies led me down the incorrect path.

Thanks for all the help.. Much appreciated.