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1099-R Worksheet for Covid-Related Distribution; Not sure what box to check to have the full distribution taxed in 2020

Ephesians3-14
Level 7

Proseries just released the updated Form 1099-R worksheet for the new Covid-related distribution rules and something's not right. The rule is that if a taxpayer qualifies, the distribution (up to $100K) will not be subject to the 10% early withdrawal penalty and can he can choose to spread the distribution over 3 years or just take the full hit in 2020. Well....

I see the boxes to check on the 1099-R worksheet to indicate whether the distribution is a qualified Covid distribution. Got that - makes sense. But there are no checkboxes anywhere on the 1099-R worksheet to indicate that I want to pay tax on the full distribution in 2020. When I check the box to indicate it is a qualified Covid distribution, the program removes the entire distribution from income! Everyone is going to have the same problem. I want to report the full distribution for this client because their income is super low in 2020. So I don't want to spread it over 3 years.

Anyone know what box needs to be checked to have the program report the full distribution in income in 2020? I looked everywhere and it's not obvious to me. Should be right there next to the other checkboxes on the 1099-R worksheet.

And where's the checkbox to indicate that you might want it spread over 3 years because I have other clients with that situation???

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4 Replies 4
Just-Lisa-Now-
Level 15
Level 15

Theres a checkbox on the 8915E if you DONT want to spread over 3 years.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
taxgirl0216
Level 3

Thanks Lisa, where can I find that box on the Software?

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INTJ
Level 2

From what I can tell when I entered the 1099-R, checking the "2020 Coronavirus-related Distribution" box AND entering the 1099-R taxable figure on line B "Entire Distribution is qualified or amount this qualified", ProSeries then cuts the taxable amount to 1/3 and carries it to the 1040.

However, this 1099-R had federal tax withheld, so if I split the distribution over the three years, the federal tax paid is NOT spread out over three years.  Its all recognized for 2020.  That could create issues for the client in years two and three.  Do we have to recognize 100% of the tax withheld for 2020?  Or can that be spread over three years as well?

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Just-Lisa-Now-
Level 15
Level 15
You cant split the withholding, its all used on the 2020 return, you can apply a chunk of the refund to 2021 though.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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