How do I spread the tax liability of a CARES Act withdrawal over 3 years on Turbo Tax, it is putting all tax liability on this year

[usaroberts]

desktop

[DoninGA]

@usaroberts That appears to be from one of the desktop editions.  And it is showing that there is  $0 Covid-19 distribution.

Delete the Form 1099-R and re-enter manually.

[usaroberts]

Just so I'm clear, you're saying delete the 1099-R in my TT desktop inputs and then re-enter the 1099-R inputs again, or delete the 1099-R and enter manually the correct amount related in to the appropriate parts of the 1040 form directly?

I'll try re-enter the 1099-R inputs again, but surely the TT software (perhaps only desktop? not sure if the online version is doing the same thing?) appears to be in need of some work in this regards....

[HockeyMom71]

I entered all the information as it appears on the 1099R but when I go to e-file I get this message:

Check This Entry:

Pension Deduction Worksheet: Federal Amount we are still working on updates related to retirement distributions that qualify for disaster or covid relief. You can keep working on your return and we will remove this message when it's ready.

I have updated my Turbo Tax and it says that everything is updated. What do I need to do so I can e-file my return.

[macuser_22]

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@usaroberts wrote:

desktop

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Do no check that box is you want to spread it over 3 years.

This is what I get and 1/3 ends up on the 1040 line 4b.

[DoninGA]

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@usaroberts wrote:

Just so I'm clear, you're saying delete the 1099-R in my TT desktop inputs and then re-enter the 1099-R inputs again, or delete the 1099-R and enter manually the correct amount related in to the appropriate parts of the 1040 form directly?

I'll try re-enter the 1099-R inputs again, but surely the TT software (perhaps only desktop? not sure if the online version is doing the same thing?) appears to be in need of some work in this regards....

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Delete the Form 1099-R and re-enter the 1099-R exactly as received.  

Working with desktop edition on my own PC and it is accurately calculating a distribution based on the answers to the Covid-19 questions.

[macuser_22]

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@HockeyMom71 wrote:

I entered all the information as it appears on the 1099R but when I go to e-file I get this message:

Check This Entry:

Pension Deduction Worksheet: Federal Amount we are still working on updates related to retirement distributions that qualify for disaster or covid relief. You can keep working on your return and we will remove this message when it's ready.

I have updated my Turbo Tax and it says that everything is updated. What do I need to do so I can e-file my return.

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If you got the COVID screens when  entering the 1099-R you must have the update for the Federal software.

The update was version  r19 on 2/26.

That message might mean the state software is not ready yet.

[usaroberts]

I've deleted and re-entered the 1099-R and get the same result.

Could it be related to how Box7 is entered? My box 7 code number is 01....the example showed earlier in this thread showed a 07-normal distribution.

Anyway, for now its still doing the same thing....

[HockeyMom71]

Ok so I was able to file for federal so it is the state software that needs updating. Any idea when this will happen?

[macuser_22]

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@usaroberts wrote:

I've deleted and re-entered the 1099-R and get the same result.

Could it be related to how Box7 is entered? My box 7 code number is 01....the example showed earlier in this thread showed a 07-normal distribution.

Anyway, for now its still doing the same thing....

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No.   (And there is no code "01"  - just "1").

Code 7 means over age 59 1/1 and code 1 is under 59 1/2 that applies a 10% penalty that is eliminated of you qualify for the COVID tax treatment.

[macuser_22]

@usaroberts - Do you also have a 8606 form in the forms list?

There might be a software issue if you do.

[usaroberts]

yes, but the form 8606 is not done yet.

Maybe thats the issue?

[macuser_22]

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@usaroberts wrote:

yes, but the form 8606 is not done yet.

Maybe thats the issue?

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Yes,  There is what I consider a bug when there is a 8606.    The 8915-E form needs line 15b from the 8606 form but TurboTax does not calculate and populate the 8606 line 15b currently.     That results in an error on the 8606 since it wants a "user entered" value of the part of line 15a that was COVID  related - usually all of it .

Running the Federal error check will ask for the 15b value or you can switch to the forms mode and enter the line 15a amount into line 15b.

Then the 8915-E will calculate the correct taxable amount on 1040 4b.

[usaroberts]

Ok, finishing the 8606 entry fixed the issue I was having with the 1099-R and the software picking up the early distribution and giving me the option to take the hit in 2020 or spread it out over the 3 years.

Thanks for helping...really appreciate it 🙂

[Heliopolis]

So, if the form to distribute the tax liability over three years is still in draft form, should we:

(1) wait for the draft form to be finalized?

(2) wait for TT to include the finalized form in its updates?

(3) file now and divide the taxable amount by 3 somehow manually in TT?

(4) file now with the full liability and then later file an amended return?

Finally, any estimates as to when the form 8915-E will be finalized?

I saw a comment earlier that TT does divide the tax liability by three years in final sections of the application, however I had no such prompt or area in TT to do this