Preparing for 8915-F

[athaureaux6]

Good morning online community, for the taxpayers who split the 2020 distributions in three years. In previous discussions I asked if the part corresponding to the 2021 and 2022 will be subject to the 10% penalty and myself and many fellow tax preparers thought that because it will be subject to the rules of 2020 the penalty will not applied for those parts. Today there is an ice storm in Jersey and I do not have too much to do this morning, I started reading the instructions of the Form 8915 and on page 3, under Additional Tax it suggests that the parts corresponding to 2021 and 2022 will have the 10% penalty. Any thoughts will be appreciated. Have a great day everybody.  

[Just-Lisa-Now-]

no penalty on it in any of the years....I have clients that have had these distributions for other disasters in the past, theres no penalty in subsequent years.

[qbteachmt]

The provision is Disaster, and then Covid Disaster, specifically. The allowances to defer reporting the income for taxability purposes doesn't change if the distribution was Qualified or not. That is determined at the time of the distribution. You would need to do the due diligence or have it in your records that the client(s)' distribution Qualified as Covid-related. Once you have this done, the only other issues are the delayed reporting, clients' desire to repay, or to accelerate the reporting as income.

There also is a similar confusion over the SE tax deferrals. It is a delay in Payment, not in reporting. There is nothing else to put on any tax year, now. The clients simply need to make the required payments.

Because of all the covid provisions, employers have it much worse.