How Can I Enter Form 8915-E -Qualified Disaster Distribution in ProWeb?
Form 8915-E is for taxpayers adversely affected by the 2020 pandemic as well as those who were served with a retirement plan distribution that makes them eligible for favorable tax treatment. The distribution, regardless of whether it is a plan loan offset or an actual distribution, it can be made through any of the following retirement plans:
- An IRA: traditional, SEP, SIMPLE, or Roth.
- A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan).
- A qualified annuity plan.
- A tax-sheltered annuity contract.
- A governmental section 457 deferred compensation plan.
There are different forms to be completed for those filers who are married and both received qualified distributions. The whole qualified distribution may be added to the 2020 income or it may be split equally over three years. The only exception to this comes about when either the taxpayer or their spouse (if applicable) dies in 2020. In such a case, it is mandatory that the whole distribution be reported on the 2020 tax return.
Note: The distribution’s taxable amount in Form 1099-R entry page should be zero in case Form 8915-E is included in the return. The retirement distributions’ taxable amounts flowing to Form 1040 should be equal to the sum of the Form 1099-R Box 2a amounts and those flowing from all Form 8915-E.
Caveats:
It is mandatory that the distribution be one that was made before the end of 2020.
It is mandatory that the distribution be one that was made to a qualified individual who is defined as anyone who meets any of the criteria below:
- Taxpayer diagnosed with Coronavirus
- The taxpayer whose spouse or dependent had coronavirus
- The taxpayer, theri spouse or anyone sharing the principal residence of the taxpayer and experienced financial consequences that were adverse due to any of the following:
- Layoff, quarantine, furlough or reduced work hours because of coronavirus
- Being unable to work because of lack of childcare as a result of coronavirus
- The shutting down of or reducing the operation hours of a business due to coronavirus
- A reduction in the earnings or self employment income because of coronavirus
- Rescinded job offers or delayed reporting days because of coronavirus.
- When $100,000 is the total of the entire distributions from the retirement plans. Every extra amount on top of the $100,000 may be subject to the extra tax on early distributions. In the event that a taxpayer and their spouse are completing different forms, the $100,000 limit will apply separately to each.
- A distribution considered a 2020 disaster distribution is not qualified for the 20% Capital Gain Election nor is it eligible for the 10-Year Tax Option on Form 4972.
- It is possible to repay Qualified distributions. The repayments will be referred to as trustee-to-trustee transfers, and those repayments made prior to filing of the return can be reported on Form 8915-E. However, there are distributions that cannot be repaid:
- Qualified 2020 disaster distribution that you receive as a beneficiary (except a surviving spouse)
- Required minimum distribution
- Distributions that are not of the IRA and are part of a series of significantly equal regular payments made for -
- Ten years or more
- The life expectancy of the taxpayer
- Joint lives or the life expectancies of the taxpayer as well as their beneficiary.
The taxpayer must first complete Form 8915-C and/or 8915-D before completing Form 8915-E in case they received distributions for 2018 and/or 2019 disasters in 2020 and are filing either or both Form 8915-C and 8915-D. Check out Form 8915-E instructions for a guide on how to coordinate the forms and distributions.
Additional Information: