When will form 8915-E 2020 be available in turbo tax?

[ld4runner]

The form is still NOT available on my premier desktop version. I just called TT help desk and the nice lady told me the form will available on March 11. I didn't mention which version of TT I was using so how is it possible that it's working for some and not others?

[smbosworth]

I have deleted and re-entered 3 times.  I really want to pay it this year and get it over with.  I think there is an issue that it is not calculating properly.

[DoninGA]

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@smbosworth wrote:

I have deleted and re-entered 3 times.  I really want to pay it this year and get it over with.  I think there is an issue that it is not calculating properly.

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Just was working with another user with a similar problem using the online editions.  Recommend that you clear your return and start over if deleting the 1099-R does not fix this issue.

If you have not paid for the online edition you are using, have not filed your tax return or registered the Free edition, then you can clear your return and start over with a lower priced edition. Click on Tax Tools on the left side of the program screen while working on the 2020 online tax return. Click on Clear & Start Over.

[cmd751]

This worked for me, thank you!

[Auriadalaygon]

Can u give more details on where and how you can find 8915 E form?

[DoninGA]

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@Auriadalaygon wrote:

Can u give more details on where and how you can find 8915 E form?

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You need to enter or edit your Form 1099-R and answer the questions concerning a Covid-19 distribution.

[robbyja]

One thing that helped me was to download the 8915-E from the IRS website. 

Read the instructions and fill it in manually. 

Doing so allowed me to understand the logic which presuming you don't have prior years of disaster retirement fund loans (i.e. 8915-A, B, C or D), is pretty simple.

Being able to qualify an amount is self assessed based on a criteria questionnaire. 

Of course, if you didn't "suffer" any of the hardships listed, you logically don't qualify.

Assuming you qualify, it asks how much of the 1099-R total qualifies as a disaster distribution (up to $100k). 

The form continues asking if you want to split the taxes of that into three parts. 

If you do, 1/3 of the gross total distribution becomes the "preliminary" 2020 taxable amount. 

If you don't want to split it, the 100% of the distribution is the preliminary amount. 

The form continues asking if you made a repayment. 

If you did, it reduces the preliminary amount (100% or 33% depending on your election) by the repayment amount.

So, suppose you took $75K from your IRA in April of 2020 because you lost your job due to COVID-19.

You want to split the taxable amount over 3 years.

The prelim amount is therefore $25k ($75k / 3).

You subsequently repaid $20k of the loan.

The amount subject to tax is therefore $5k. ($25k - $20k).

If you repaid $25k or more, THIS year's tax liability for this distribution is $0.

Bear in mind that if you elected to split the withdrawal over three years, for each of the tax years 2021 and 2022, you still have the remaining thirds to pay taxes on (or to repay which based on other disaster loans, is an entirely different set of forms). 

ALSO, if you're using TT (I'm the online version), complete your return and view it as part of the "print" process (prior to actually filing).  The filled in 8915-E form will be there as part of your return documentation.

[VTCATS]

Just to confirm something.  The 3 year question is pertaining to spreading out the income withdrawn over 3 years, but NOT, spreading out the withholdings I had, over 3 years.  In this scenario, 401K income withdrawn will be divided over 3 years, but withholdings will all be applied the first year.  Is that correct?

If so, obviously I'll have to plan for an approx extra withholdings or tax paid at some point in year 2 and 3.

[DoninGA]

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@VTCATS wrote:

Just to confirm something.  The 3 year question is pertaining to spreading out the income withdrawn over 3 years, but NOT, spreading out the withholdings I had, over 3 years.  In this scenario, 401K income withdrawn will be divided over 3 years, but withholdings will all be applied the first year.  Is that correct?

If so, obviously I'll have to plan for an approx extra withholdings or tax paid at some point in year 2 and 3.

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You are correct:  withholdings will all be applied the first year.

[dryan1929]

Yes

[macuser_22]

The whole point of the CARES act is to put money in your pocket now.    If the government kept the tax withheld to be applied in future years, then not only would you not have use of the  money, but you would be giving the government an interest free loan of your money to hold for you.

[robbyja]

Hello.

I can't speak to 401ks as they may have separate rules (vs an IRA). 

You should speak to your plan administrator.

As to an IRA withdrawal, the 8915-E offers you the option to split your gross proceeds (whatever you took from the IRA) into 3 parts. 

If you elect to do that, 1/3rd of the gross withdrawal becomes income on the 2020 return. 

The 2nd 1/3rd will be 2021 income and the final 1/3rd will be 2022 income.

Obviously, if you split the gross into three parts, this year's taxes will be lower than if you didn't split.

And just like any tax return, if you withheld more in total than your calculated taxes due in total, you will get a refund.

One last thing.

As noted above, the 8915-E allows you to split the proceeds into thirds. 

It also allows you to qualify all or part of the withdrawal as a loan allowing for a full or partial repayment of that loan. 

Your loan repayment reduces the 1/3rd - potentially to $0.   

Here's a very simplified example.

I took an IRA withdrawal of 10,000.  

$2,000 of that went to the IRS for taxes.

$8,000 went into my bank account.

I became unemployed due to COVID so I qualify for the hardship.

I choose to split the withdrawal ($3,333)

I realized that I didn't need the full amount and subsequently repaid $3,500 to my IRA.

Because I repaid more than the 1/3rd, this year's income from this becomes $0.

In this very simplified example, I get the $2,000 I paid in taxes back as a refund.

I hope that helps.

[Irene2805]

Form 8915-E is available in both the CD/Download and online versions of TurboTax.  If you are using the online version or after you have updated the CD/Download version be sure to go back through the 1099-R section in the federal return. 

In the screens following the 1099-R entry screen:

• You will see a series of questions to see if you are exempt from the additional taxes on early withdrawals [Screenshot #1, below]; and 
• You will be asked if you want to pay all the tax this year of just 1/3, with the rest reported over the next two years. [Screenshot #2]  Check the box if want to pay tax on the entire retirement distribution in 2020.
• If you do not check the box, 1/3 of the distribution will appear on line 4b (IRAs) or 5b (Pensions & Annuities).  1/3 will appear on your 2021 return and 1/3 on your 2022 return.

Keep in mind that all your withholding and estimated payments for 2020 will appear on your 2020 return.

Screenshot #1

Screenshot #2

[smbosworth]

Hi,

I would really appreciate some help!  I have been over this and over this.  I have re-enterd the 1099 several times.  I reset my whole return and started from scratch only to come up with the same issue:

Withdrew from  401K for COVID reasons  $22,723.

Paid back $15,000 within the year.

I want to pay all tax this year - they did withhold.

When I enter the withdrawal by itself without the payback), Line 5B includes it all ($22,723) and all is well.

But once I add the payback of $15,000, it calculates 5B as $13,331.  It should be $7,723, right?

Ugh - I have been going over and over this since last week and I just don't get it.

[smbosworth]

I figured out the $13,331.  It is the $15,000 I paid back, less the $1,669 that was the non taxable part of the withdrawal (box 5 on the 1099).  It still is not right - but I get the number now, at least.  But that is not what should be on Line 5b, right?   It should be box 2 on the 1099 less the $15,000.  Am I missing something?