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Early distribution CARES Act, etc.

ajp
Level 4

A client took an early distribution under the CARES act.  The 1099-R still has it coded as "1--Early distribution, no known exceptions."  When looking into this, I found an article saying that we will need to use form 8915-E to eliminate the penalty.  However, I can not find this form.  I only see A-D.  Does anyone know if/when it will become available?  

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qbteachmt
Level 15

"The form 8915E is just another way to do it and to split the distribution over 3 years period which is also,"

The 5329 is for the waiver of the penalty.

The 8915-E is for the tax treatment.

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9 Replies 9
tlcecpa
Level 2

Having same issue with several clients.

 

Software says it still needs to be update to comply with CARES.

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Just-Lisa-Now-
Level 15
Level 15

https://myproconnect.intuit.com/releasedates

you should bookmark this site so you can check the release dates of forms.

8615E appears to have the date 2/25


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
ajp
Level 4

I will bookmark that!  Thank you 

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qbteachmt
Level 15

"The 1099-R still has it coded as "1--Early distribution, no known exceptions." "

The issuer of the 1099-R has not made the determination that this is a qualified distribution; that's why you see that code. I've only seen one provider giving out certification forms to keep on file.

Your client needs to confirm this qualifies.

Form 5329 is for waiving the penalty.

Form 8915-E is for taking the total taxable income in the first year or spreading it out over three years.

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"Level Up" is a gaming function, not a real life function.
Greta
Level 8

Is it possible to use Form 5329 "Other" reason for waiving the 10% penalty? Covid hardship.

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qbteachmt
Level 15

"Is it possible to use Form 5329 "Other" reason for waiving the 10% penalty? Covid hardship."

Yes, that's why you use Form 5329, because that 1099-R has code 1.

Other. The following exceptions also apply.
• Distributions incorrectly indicated as early distributions by code 1, J, or S in box 7 of Form 1099-R.

"Qualified disaster distributions, including coronavirus-related distributions. The additional tax on early distributions doesn't apply to qualified disaster distributions, including coronavirus-related distributions. See Forms 8915-C, 8915-D, and 8915-E, as applicable, for more details."

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"Level Up" is a gaming function, not a real life function.
ajp
Level 4

Awesome, thanks!

And, yes, she has paperwork that confirms that she qualifies.  I just needed to know how to make it work with the software. 

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athaureaux6
Level 7

Hi, you do not need that form to waive the penalty, go the Form 5329, Look for the Letter L, under Distribution not subject to additional tax or something like that, enter the amount of the distribution on the space for line L, you will see that the program will place code 12 on Line 2, and the 10% penalty will be waived. If you check the instructions for Form 5329, code 12 is reserved for Coronavirus related distributions, you can check the instructions on the irs website, form 5329. I do not think that they have the instructions on the software. I have done many times already this year. The form 8915E is just another way to do it and to split the distribution over 3 years period which is also, for many people tricky because it can cause a tax burden in 21 and 22. Thank you. 

 

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qbteachmt
Level 15

"The form 8915E is just another way to do it and to split the distribution over 3 years period which is also,"

The 5329 is for the waiver of the penalty.

The 8915-E is for the tax treatment.

*******************************
"Level Up" is a gaming function, not a real life function.

View solution in original post