Tax Year 2021:
Any distributions you took within the 2021 tax year will be taxable on your federal return. This will also include any Coronavirus Related Distributions as taxable income.
For Tax Year 2020:
Distributions taken in 2020 are taxable (some exceptions apply)- including Coronavirus related distributions. However, the IRS has released guidelines for tax-deferral treatment for this type of distribution.
How do I waive the 10% penalty and spread my distribution over three years?
To take your distribution in three equal amounts over three years and waive the 10% penalty for the early distribution, take this pathway
- Federal Section
- 1099-R, RRB-1099, RRB-1099-R, SSA-1099
- Add or Edit a 1099-R
- Enter your 1099-R information as it appears on your 1099-R
Select continue after making your entry, and choose Retirement Plan. When your entry contains a qualifying code in Box 7, you will be prompted to indicate if the distribution was due to a qualified disaster.
Choose your type of plan and enter the distribution amount you received (limited to $100,000). This is also where you would enter any repayment you made on the distribution. The program will carry your information to the 8915-E automatically.
*If do not want to spread the distribution over a 3 year period, you will need to check the box next to "Elect NOT to spread the taxable amount over 3 years."
Please Note: The taxable amount will be removed from the 1099-R and placed on the 8915-E per IRS guidelines.