2020 Coronavirus-related distribution penalty for early withdrawal

Forum|Forum|5 years ago
May 3, 2021
3 replies
21 views

I entered distribution information for a client that qualified for the 2020 Coronavirus-related distribution and also checked on the 8915-e to see if there was a location to remove the penalty for early withdrawal code 1 associated with the distribution on the form 1099R. The total distribution was $50,000. but he is only using $30,000.00 of that for the qualified disaster amount. I am still coming up with a Early Withdrawal penalty on Schedule 2. What I need to do to correct.

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Just-Lisa-Now-

Intuit Community Champion

Did you check the Covid disaster boxes on the 1099R worksheet?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

2

2084Author

Level 5

Yes. I checked the 2020 Coronavirus-related Distribution under Part A and and On B I put in $30000.00 0n the "or amount that is qualified" space. What appeared on the Schedule 2 was the amount equaling 1/3 of the penalty that would be applied on the amount of the $30,000. allocated to this year. I looked on the 8915 and saw nothing pertaining to the early withdrawal penalty. The only thing that I could think of was to change the code on the 1099-r from 1 early distribution to code 7 ordinary distribution but wouldn't want to create a situation with IRS. Thanks for any suggestions that you may have. I will also check to see if there is a new code relating to disaster withdrawals now that I'm thinking of it.

qbteachmt

Level 15

"I looked on the 8915 and saw nothing pertaining to the early withdrawal penalty."

Because it's on the 1099-R worksheet. But you also need to pay attention to Partial Disaster, and part is Not.

"The only thing that I could think of was to change the code on the 1099-r from 1 early distribution to code 7 ordinary distribution but wouldn't want to create a situation with IRS."

You don't make that change. You have already been presented with a 1099-R. You didn't originate it and you don't change what was presented on it. You deal with what happened because of that distribution.

You should have early penalty on the $20k, which is sad and doesn't need to be part of that taxpayer's costs at all.

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dkh

Level 15

The 1099R worksheet has Qualified Disaster Distribution Smart Worksheet. Check the appropriate box for Option A and do your money split in Option B

You will have a penalty on the $20K

qbteachmt

Level 15

If he is under 59 1/2, then it's right here in your description: "but he is only using $30,000.00 of that for the qualified disaster amount. I am still coming up with a Early Withdrawal penalty on Schedule 2. What I need to do to correct."

You cannot split this into Portions, then expect the early part not being declared as Disaster, to fall under Disaster exclusion.

You realize there is nothing that asks what it got used for? Why are you splitting the $50k at all?

Don't yell at us; we're volunteers

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