When filling out the 1099-R section of TurboTax, the question comes up: "How much of this distribution was a COVID-19 distribution?"
1. My wife took out an early withdrawal from her IRA in January 2020, but did not specify that it was COVID-19 related (hopefully this does not matter!)
2. I had reduced hours later in the 2020 year (June-Sept) as a result of COVID-19 impacting my line of work.
I believe my wife's early IRA withdrawal should qualify as a COVID-19 distribution, because I had work hours reduced during the year. Is this correct?
My basis for this is from Notice 2020-50:
"In addition, pursuant to the authority of the Secretary to issue guidance to
provide for other factors under section 2202(a)(4)(A)(ii)(III) of the CARES Act, a
qualified individual for purposes of this notice is an individual who experiences
adverse financial consequences as a result of:
• the individual having a reduction in pay (or self-employment
income) due to COVID-19 or having a job offer rescinded or start
date for a job delayed due to COVID-19;
• the individual’s spouse or a member of the individual’s household
(as defined below) being quarantined, being furloughed or laid off,
or having work hours reduced due to COVID-19, being unable to
work due to lack of childcare due to COVID-19, having a reduction
in pay (or self-employment income) due to COVID-19, or having a
job offer rescinded or start date for a job delayed due to COVID-19;"
If my understanding is correct, and her withdrawal can be classified as a COVID-19 distribution, then the TurboTax question I cannot seem to find an answer to is: How much of the withdrawal is classified as a COVID-19 distribution?
During my research of the IRS site and TurboTax I could not find a definition for this amount. Ideally all of it would be eligible, but the question is being asked and therefore leads me to believe there's a way to calculate this amount. Is it equal to the lost wages from the reduced hours?
Thank you to anyone who can shed some light on this!
