My daughter took out a Covid-19 related 401K distribution and Turbo tax is saying the "pension deduction worksheet" is still being worked on for distributions that qualify that qualify for disaster or Covid relief and the message will be removed when its ready. The federal shows that it is okay to e-file but not the state. Is anyone else having this problem? if so, do we know an approximate time frame when it will be fixed?
It's a known issue for a few states. I'm stuck in the same boat. No known fix timeframe. I ended up filing federal by itself and chose to file state later.
Form 8915-E is finalized. You can use that form to spread out the income over 3 years, if you were affected by COVID.
To be affected by COVID, you or someone in your house were diagnosed with COVID, you experienced adverse financials consequences as a result of COVID due to ability work, reduced hours and more. See Coronavirus-related relief for retirement plans and IRAs. Most people were affected by COVID.
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.
In addition, you have those 3 years to repay the money. So you may be able to repay some of it in the next 2 years and not have to pay the full tax on your distribution.