Why can't i accurately enter my qualified disaster...
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New Member

Why can't i accurately enter my qualified disaster distributions? It isn't letting me divide the taxes over 3 years and it is wrongly charging me the 10% penalty.

TurboTax error message states, "You'll need to revisit this area.  The IRS instructions related to disaster distributions weren't ready in time for us to include them in this release.  Please revisit this area later."  Well, when is later?  I really want to get these taxes filed so I'm not sure what to do.
3 Replies
Employee Tax Expert

Why can't i accurately enter my qualified disaster distributions? It isn't letting me divide the taxes over 3 years and it is wrongly charging me the 10% penalty.

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 be aware that the IRS currently won't start processing returns until February 12, 2021.

 

Please follow these steps to enter your 1099-R:

  1. Login to your TurboTax Account 
  2. Click on the Search box on the top and type “1099-R”
  3. Click on “Jump to 1099-R” and you should see the “Your 1099-R Entries” screen
  4. Click "edit" and continue until "Tell us if any of these uncommon situations apply" screen
  5. 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.

 

 

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New Member

Why can't i accurately enter my qualified disaster distributions? It isn't letting me divide the taxes over 3 years and it is wrongly charging me the 10% penalty.

Does anyone know when this update will happen? 

Employee Tax Expert

Why can't i accurately enter my qualified disaster distributions? It isn't letting me divide the taxes over 3 years and it is wrongly charging me the 10% penalty.

The issue has been submitted and is currently under investigation.  Please click on the following link and sign up for an email notification when it's fixed.  

 

Form 8915-E

 

Thank You for your patience

 

If you are under age 59 1/2, the distribution from the retirement plans is considered as an early withdrawal.  Generally, you will pay both regular tax and an additional 10% penalty of your entire distribution unless you met certain criteria.  Due to the CARES Act, if your retirement distribution is related the Covid-19, you will not be liable for this additional penalty.  You will still pay the normal taxes like your wages and income.  For more information from the IRS, click here: Covid Relief.  If your distribution is not related to the Covid, you will need to pay the penalty.  

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