IRA distribution and full repayment in 2020, answered yes to Cares Act on 2020 taxes since over 60 day limit, how to handle disaster question on 2021 taxes

[T4Tax]

In 2020, we made an IRA distribution and received a 1099R.  The exact amount was used to open a new IRA, also in 2020, but beyond the 60 day rollover limit.  Both were traditional IRAs.  On our 2020 taxes, I entered the 1099R and answered "yes" that it qualified for the Cares Act.  After the Covid qualifications questions, I selected that we "repaid all of the distribution."  On the 1040 of my 2020 tax return, the amount was in 4a (IRA distributions) and "rollover" was in 4b; therefore none was taxable.   I did receive a Form 5498 for 2020 later in the year which shows the amount in Box 2, Rollover Contributions.  Now to my 2021 tax return...  I do not have any 1099R for 2021.  I'm at the end of the Income sections and it's asking "did you take a disaster distribution any time between 2018 and 2020?"  As mentioned above, I did answer yes, that it qualified for the Cares Act on my 2020 tax return, but I did not split repayment  over multiple years and we did repay / rollover the amount in 2020 and did later receive form 5498 showing the rollover contribution.   What do I do here?  And will there be further questions that I need to know how to answer?

[ColeenD3]

In 2020, you were allowed to take a COVID distribution if you qualified. You do not "roll this over", you repay it in the same year or take it over the next three years. If you repaid it in the same year, you would need to amend your 2020 return.

From the IRS:

"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.

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."

If you did take a regular distribution, not qualified as a QDD, you missed the deadline to roll it over and the distribution was all taxable.

Qualified 2020 Disaster Distribution Requirements In order to be a qualified 2020 disaster distribution, the distribution must be a coronavirus-related distribution, that is,

 1. The distribution was made in 2020 before December 31, 2020; and 

2. The distribution was made to a qualified individual. See Qualified individuals next for details.

If (1) and (2) apply, you can generally designate any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a qualified 2020 disaster distribution, regardless of why the distribution was made. Qualified 2020 disaster distributions are permitted without regard to your need.

[T4Tax]

I don't fully understand your response.  We did take a covid distribution in 2020 and recontributed the same amount into a qualified plan.  I presented my detailed situation to this TurboTax forum last year, and the expert advised that I handle it the way I described.  They explained to enter in the 1099R section that I repaid all of the distribution and the entire amount was listed on my 1040 as a distribution with zero taxable.  Since I repaid it in the same year (2020), why are you saying that I would need to amend my tax return?  The example of including the distribution over a 3 year period is confusing especially since this is not my situation.  

[AmyC · Accepted solution]

You need to change your answer to no you did not take a disaster distribution since the program is looking for the 1/3 to claim on your return. You completed all of the disaster things in 2020. This is not for the tax form, this is a program question trying to get you to the right place. So answer no to disaster distribution this year and next year regardless of the facts. You did last year correctly.