8915E

[WinCPA1]

I have a client who withdrew money in 2020 from their IRA and on the tax return elected to have it taxed over a three year period on the 8915-E.  Can the 2020 return be amended and the election revoked on the 8915-E so that he can have the full amount taxable in 2020? 

[Just-Lisa-Now-]

I dont think so, but if you did that, youd have a bunch of taxes due that are late and subject to penalty and interest, right?

[qbteachmt]

It's the other way around: you elect to declare it as income in the year distributed; otherwise, disaster distributions are spread over three years. You can amend 2020.

[WinCPA1]

Yes, he would owe quite a bit back with interest and penalties, so I don't think he will want to do it.  I wouldn't have advised him to spread the distributions out because he now is losing out on stimulus money and child tax credit because of the income thresholds.  I just wanted to know if it was an option or not.  Thanks!!

[qbteachmt]

We've seen that taxpayers are changing their minds; I don't understand it, either. Perhaps reporting it all in 2020 helps with EITC? Or, they are making more in 2021 and not want to see this addition? Of course, I never would have recommended taking that distribution in the first place. I wonder how many people stripped their accounts entirely. Maybe they needed to to repay their employers for the FICA tax holiday offered the year before this. What a mess.