How to amend 2020 return for retirement plan repayments of Coronavirus distribution

[Just-Lisa-Now-]

Same way youd amend any 2020 return I suppose...maybe you need to explain the situation more. 

If a 2020 Covid distribution failed to be reported, and now you want to include it on 2020, you'll need to amend 2020, 2021 and 2022 to include that 1/3 amount on each year. 

Seems rather late for IRS to just now be catching up with a missed 2020 distribution, unless this client has been hanging onto the IRS letter for a couple years.

[qbteachmt]

From: https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-...

"Q7. May I repay a coronavirus-related distribution?

A7. In general, yes, you may repay all or part of the amount of a coronavirus-related distribution to an eligible retirement plan, provided that you complete the repayment within three years after the date that the distribution was received. If you repay a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct trustee-to-trustee transfer so that you do not owe federal income tax on the distribution.

If, for example, you receive a coronavirus-related distribution in 2020, you choose to include the distribution amount in income over a 3-year period (2020, 2021, and 2022), and you choose to repay the full amount to an eligible retirement plan in 2022, you may file amended federal income tax returns for 2020 and 2021 to claim a refund of the tax attributable to the amount of the distribution that you included in income for those years, and you will not be required to include any amount in income in 2022. See sections 4.D, 4.E, and 4.F of Notice 2005-92 for additional examples."

You'll want to  confirm it's not just three years by tax year, but from the date of the distribution being repaid.

[Just-Lisa-Now-]

Oh I misread, I didnt see the word "repayments"

[qbteachmt]

It takes a village...

[SFtax2020]

Thank you for your reply.  I am challenged by the "mechanics" of amending the 2020 tax return for repayments that were done in 2023 within the allowable time frame for repaying the coronavirus retirement plan distribution.  The 8915-E form allows for repayments prior to the due date of the 2020 return but not subsequent.  ProSeries gives me an error message when I try to complete the form...

[rbynaker · Accepted solution]

Yeah, the instructions are sorely lacking on this.  The general consensus seems to be to report it as a repayment before the return was filed since there's no other place to put it.  That will at least get the math correct and I would put a detailed description in the 1040X Part II.

[qbteachmt]

Did you read the sections referred to in this document:

https://www.irs.gov/pub/irs-drop/n-05-92.pdf

You have to know if your taxpayer elected to report the distribution entirely in 2020, or let it be spread over the three years, as well. The repayments are essentially rollovers, so you should get the 5498 for each year of repayment, to confirm.

[SFtax2020]

Thank you - that is a workable solution.  I appreciate your response.

[SFtax2020]

Thank you.  I did see an IRS notice that gave similar information.  My question was more about reporting mechanics on the amended return.  Taxpayer had paid all the tax in the year of distribution in 2020 and then repaid all within the allowable time frame in 2023.   Just need to go back and amend to show the repayment and the Form 8915-E was lacking a way to do that.  I appreciate your response.

[qbteachmt]

"Just need to go back and amend to show the repayment"

You don't really show a repayment. For a rollover, you mark the 1099-R worksheet that it was rolled over.