Form 8915-E Calculations are not correct in TT

[DocDot]

After reviewing the Form 8915-E calculations, I found that the calculations are not correct.

For example:

I withdrew $100K and paid back 40% of it, for a total of $40K.

I owe taxes on the $60K I did not repay.

I want to pay taxes on $20K per year, for three years.

TT says I don't owe any additional taxes this year. REALLY???

Once the paid back amount falls to under 33.33%, then TT has me paying additional taxes.

It's like the paid back amount is being multiplied by 3.

Does anyone have an explanation?

Thanks!

[DanaB27 · Accepted solution]

Please be aware that the calculations on Form 8915-E are as follows if you elect to have the 100k spread out over 3 years. 

The formula is 1/3 of the total amount minus any repayments made in the year. Without any repayment you will have a $33.33k included in your income in 2020, 2021 and 2021. Since you paid $40k in 2020, this amount will be deducted from the 2020 $33,33k and the rest of the repaid amount will get carried forward to 2021. Therefore, you will not have any tax liability on this distribution on your 2020 tax return.

Please see your Form 8915-E for the calculations, please see lines 17, 18 and 19.

[DocDot]

So just to clarify, not only is the taxable amount spreadable over three years, but so is the repayable amount?!

If I repay a third of the total withdrawal amount, in each of the next three years, then I'll not have any taxable consequences?

Thanks in Advance!

[DanaB27]

Yes, that is correct. Also, if some repays everything in a later year (within the 3 years) then that person can amend the previous years to get a refund on the taxes paid.

please see this example from the IRS:

If, for example, you receive a coronavirus-related distribution in 2020, you choose to include the distribution amount in income over a 3-year period (2020, 2021, and 2022), and you choose to repay the full amount to an eligible retirement plan in 2022, you may file amended federal income tax returns for 2020 and 2021 to claim a refund of the tax attributable to the amount of the distribution that you included in income for those years, and you will not be required to include any amount in income in 2022.