2020 1099-R distribution spread over 3 years

[deestax]

I have a client that "was told" that they could take a distribution from their retirement fund and spread it over 3 years without the early distribution fees because of the Covid-Related Disaster.  I processed their 2020, 2021 returns and checked the boxes for those and it did not apply the early penalty.  This is the last year and ProSeries is giving me error code when I check the same boxes I have in the past two years.

They are not very happy because they "were told" that they wouldn't be penalized for it.  Yes, I know, they were not "told" by a tax professional, but by the investment company.

Can someone suggest what I can do?  Will the return go through if I override it?  I would love to give them the correct reason "why" when they ask me.

TIA

[dkh]

You should/would have done  Form 8915E in 2020  and then you have F8915 for 2021 and 2022......

if you are getting an error possibly you aren't entering the info correctly

[Just-Lisa-Now- · Accepted solution]

"This is the last year and ProSeries is giving me error code when I check the same boxes I have in the past two years."

Not sure what boxes you checked the last 2 years, but the 8915F should have been included in all 3 years returns, so the IRS knew it was a Covid related distribution.

If you just using the 1099R worksheet for 2022 with the 1/3 amount of the distribution from 2020, just code it 7 and the penalty will go away.

[IRonMaN]

I wonder if the 8915F is available yet for 2021.😜

[deestax]

Just-Lisa-Now-

I changed the code to 7 and it did take it away!  Thank you!  Unfortunately I wasn't aware that I should have used Form 8915F in prior years.  

Thank you all for your information and help!

[qbteachmt]

I find this a bit confusing. You used quotes, yet you are the one who prepared 2020, 2021 and now 2022, but you still used "told" as if it is suspicious? You can and should read all of the info and updates and elections and provisions that apply to things like this, and over three years now, nothing changed, because all of the provisions and eligibility was from only one or more 2020 distributions. Are you sure they even qualified?

https://www.irs.gov/pub/irs-drop/n-20-50.pdf

And yes, it appears you overlooked the disaster distribution form 8915 in the prior years.

https://proconnect.intuit.com/support/en-us/help-article/retirement-tax-credits-deductions/generatin...

[deestax]

The " " were because I didn't know WHO told her the information as it wasn't myself.  That's all.  This was the FIRST AND ONLY one of these I have done.  I didn't know about the form 8915.  But I will do my research better.  

[qbteachmt]

"But I will do my research better."

Stay informed. Sign up for e-newsletters, for instance, and they send notices and updates and corrections and deadline warnings right to your email:

"To subscribe to or unsubscribe from another list, please go to the e-News Subscriptions page on the IRS Web site."

You can pick topics that you specialize in or are the least likely to have been updated from other sources. Examples: Payroll, Retirement, Local State and Governmental Entities, Not For Profits.

I also use IRS "What's new" on the web and in Pub 17:

https://www.irs.gov/newsroom/get-ready-for-taxes-whats-new-and-what-to-consider-when-filing-in-2023

[dkh]

I also use IRS "What's new" on the web and in Pub 17:

Wait..... Isn't that what Laura's supposed to say ..................