luvmj40,
First, congratulations on figuring out that there is COVID-related relief for you and even that there is a specific disaster form that get filled out. The specific options available to any taxpayer who has taken a retirement distribution and used it to pay expenses during COVID are given in, for example, IRS Publication 4012:
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There are times when special legislation is passed to provide assistance and emergency relief for taxpayers. In general, section 2202 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) of 2020, provides for expanded distribution options and favorable tax treatment for up to $100,000 coronavirus-related distributions from eligible retirement plans, as well as special rollover rules with respect to such distributions, to qualified individuals. Eligible retirement plans include certain employer retirement plans, such as section 401(k) and 403(b) plans, and IRAs. As expanded under Notice 2020-50 a qualified individual is anyone who:
• is diagnosed, or whose spouse or dependent is diagnosed, with the virus SARS-CoV-2 or the coronavirus disease
2019 (collectively, "COVID-19") by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or
• experiences adverse financial consequences as a result of the individual, the individual's spouse, or a member of the individual's household (that is, someone who shares the individual's principal residence):
• being quarantined, being furloughed or laid off, or
• having work hours reduced due to COVID-19;
• being unable to work due to lack of childcare due to COVID-19;
• closing or reducing hours of a business that they own or operate due to COVID-19;
• having pay or self-employment income reduced due to COVID-19; or
• having a job offer rescinded or start date for a job delayed due to COVID-19.
Qualified individuals that receive coronavirus-related distributions are not subject to the the 10% additional tax on earlydistributions.
In addition, these distributions may be included in income ratably over a three-year period, starting with the year in which the distribution is received and may be repaid in part or full to an eligible retirement plan, provided that the repayment is completed within three years after the date that the distribution was received.
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Currently, TurboTax has not been fully updated to produce the 8915-E, but this is a priority update. At present, you can get most of the way to completion of that step by following the procedure outlined below:
With respect to how to select one or more of these options in TurboTax, the interview for the 1099-R section of Income proceeds to a screen that asks "Was this withdrawal due to COVID-19 or a Qualified Disaster Distribution? You check the first radio button to say it was due to COVID-19 and continue. The next screen asks if it was all for COVID-19, which is typically answered in the affirmative for most taxpayers in this situation, and continuing gets to a screen that asks if the withdrawal was on or before Dec. 30, 2020 and then starts a list of questions for eligibility for relief mirroring the quoted excerpt above. You would answer affirmatively that COVID-19 impacted your income and continue. The next screen highlights that fact that you can repay some or all of the withdrawal, though it doesn't note that you have up to 3 years to make any repayments. I'll assume you aren't repaying anything for the time being. The following screen highlights that only a third of the distribution is taxable by default each year. You can override it if you do not want the headache of keeping track of the remainder for the next two years. The 10% surcharge will not be applied in either case. At this point the interview stops and notifies you that TurboTax is not updated yet and to come back to this area later.
I will keep a close eye on the updates and let you know when you can complete your return in TurboTax.
