How to enter income inclusion for cornavirus-related distribution for a tax year in the 3-year period and avoid the early withdraw penalty?

[tfrm01]

Hi. My wife who is 48 years old was laid off and she withdrew all of her 401k which is less than 100,000 due to financial hardship.  How to enter income inclusion for cornavirus-related distribution for a tax year in the 3-year period and avoid the early withdraw penalty?

[LenaH]

The screen to designate your 1099-R withdrawal as money taken out due to Covid-19 is found on the 1099-R input screen. Although the forms are not available to be e-filed yet, you may enter your information now and revisit the area in TurboTax at a later date. At that time, you will also be able to elect whether to include it in income over a three year period or elect to have it taxed completely on your 2020 taxes. 

You can input your 1099-R in TurboTax by following these steps:

1. Open your return. 
2. Search 1099-R with the magnifying glass tool on top of the page.
3. Click on the Jump to 1099-R link at the top of the results.
4. Answer yes to the question Did you get a 1099-R in 2020?
5. Click continue to the page Get ready to be impressed.
6. Follow the on-screen instructions.
7. On the page Tell us if any of these uncommon situations apply, put a check mark next to the statement I took out this money because of a qualified disaster (Covid-19). I have attached a picture below for further guidance.

[tfrm01]

Hi LenaH,

Many thanks for your help on finding the screen to designate my 1099-R withdrawal as money taken out due to a Qualified Disaster Distribution.  My screen shows following options and I choose the second one:

Yes, this was withdrawn due to COVID-9

Yes, this was a Qualified Disaster Distribution  <===

No, this was not a Qualified Disaster Distribution

However, I still get this message

"You'll need to revisit this area

Unfortunately, the disaster distributions area wasn't ready in time for us to include it in this release. Please revisit this area later."

Follow up questions if I may:

1. What is the ETA for "the disaster distributions area" so I can complete this form?
2. On 1099-R, Box 1 -the Gross Distribution is ex: 75,000.00 dollars; can I enter for box 2a - Taxable Amount as 25,000.00 so the tax on the distributions can be spread over three years?

Many thanks for your help in advance.

Best regards.

[DoninGA]

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@tfrm01 wrote:

Hi LenaH,

Many thanks for your help on finding the screen to designate my 1099-R withdrawal as money taken out due to a Qualified Disaster Distribution.  My screen shows following options and I choose the second one:

Yes, this was withdrawn due to COVID-9

Yes, this was a Qualified Disaster Distribution  <===

No, this was not a Qualified Disaster Distribution

However, I still get this message

"You'll need to revisit this area

Unfortunately, the disaster distributions area wasn't ready in time for us to include it in this release. Please revisit this area later."

Follow up questions if I may:

1. What is the ETA for "the disaster distributions area" so I can complete this form?
2. On 1099-R, Box 1 -the Gross Distribution is ex: 75,000.00 dollars; can I enter for box 2a - Taxable Amount as 25,000.00 so the tax on the distributions can be spread over three years?

Many thanks for your help in advance.

Best regards.

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The Form 8915-E for Covid-19 related withdrawals was released to all editions of TurboTax on 02/26/2021.

Are you using the TurboTax online editions or the TurboTax desktop editions installed on your personal computer?

Delete the Form 1099-R that has been entered.  Re-enter the Form 1099-R.