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Can 2020 return be amended to include 8915-E that was not included with original return?

toddcbad
Level 2

Taxpayer took a distribution from a 403b plan in 2020 and intends to repay it to the plan within the three-year window for qualified disaster distribution repayments. Thinking that this was a loan, he didn't think that he needed to report it and the income was not included on his 2020 tax return nor was a Form 8915-E included.

Taxpayer received a notice from the IRS looking to add the distribution to income. Taxpayer intends to use the three-year income inclusion option, so he is not trying to opt out which would have required a timely filing of this election.

Does an original 8915-E form have to be timely filed or can it be originally filed with an amended return?

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TaxGuyBill
Level 15

Yes, you can amend to file 8915-E to avoid the 10% penalty and to allow the repayment within 3 years.

However, be aware that if the taxpayer repays the amount, you may need to amend it AGAIN to remove the 1/3 of the 1099-R.

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qbteachmt
Level 15

"Taxpayer intends to use the three-year income inclusion option"

That's the default, not the elective option. The election cannot be used, now.

If there was a 1099-R, it's not a loan. You would have noticed if there was a 1099-R, though.

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toddcbad
Level 2

I stated that he is using the three year option to be clear that we understood that a late election for a one year option is not desired and is not allowed by the code.

Yes, I am aware that there is a 1099-R that the client did not include on their tax returns.

Still looking for an answer to the question.

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qbteachmt
Level 15

It's not an option to go with the three-years; it's the default. Yes, you need to amend 2020, if there was a 1099-R that was overlooked.

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TaxGuyBill
Level 15

Yes, you can amend to file 8915-E to avoid the 10% penalty and to allow the repayment within 3 years.

However, be aware that if the taxpayer repays the amount, you may need to amend it AGAIN to remove the 1/3 of the 1099-R.

qbteachmt
Level 15

"you may need to amend it AGAIN to remove the 1/3 of the 1099-R."

That's a good point. Since the distribution was in 2020, we are half-way into that third year right now. I would find out when he intends to make any payment and for how much, to take that into consideration for the amendment you would be preparing now.

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