Covid Rollover - Repayment Error or 8915-F

[humphr35]

In turbo tax 2021, I don't believe  the repayment or rollover question on 8915 to be correct. I took a COVID distribution from my 401k in 2020 and then repaid (rolled over) the amount in 2021 to my IRA. From all IRS documents I have read, this is allowed. The repayment simply needs to go an eligible retirement plan, see below:

7. May I repay a coronavirus-related distribution?

A7. In general, yes, you may repay all or part of the amount of a coronavirus-related distribution to an eligible retirement plan, provided that you complete the repayment within three years after the date that the distribution was received. If you repay a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct trustee-to-trustee transfer so that you do not owe federal income tax on the distribution.

The issue that I am dealing with is that if I enter that the repayment went to my IRA and not the original 401k, Turbo tax is not recognizing the repayment and thus income deduction. If I indicate the repayment (rollvoer) went back to the 401k, then my taxes are reduced. I think this is an error in the software processing of Turbo tax. 

[RobertB4444]

Technically you repaid it to the 401k and then rolled it over.  The software requires that you repay it to the source - which you did - so enter it as a repayment to the original 401k.  

@humphr35

[fanfare]

@humphr35 

It is not the software.

you must enter the repayment into the same section that shows the distribution, so you can be credited,

regardless of the fact that you put it back into an IRA.

[dmertz]

@humphr35 , you are correct, the wording on TurboTax's repayment page is wrong.  It should say "Repayment of an IRA distribution" and "Repayment of a distribution from any other type of plan."  Enter your repayment in the "other type of plan" box.

If you repaid the entire amount, you'll also need to amend your 2020 to reclaim the taxes originally paid on this distribution with your 2020 tax return.