CARES Act IRA Distribution/repayment - Tax Software

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michaeljc70
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CARES Act IRA Distribution/repayment - Tax Software

Post by michaeljc70 »

I took a ~90k distribution using the CARES Act (to make it penalty free). I paid back $30k already. H&R Block (Windows version) seems to be counting the amount 2x. It is taking it from the 8606 once (without the repayment deducted) and once from the 8915-E (with the repayment deducted). This tIRA has a basis of 11,440 and a value of $750k. How should this be showing up? I know I should get a small break due to having some basis and that takes place on the 8606.

H&R Block's website says all these forms are "final". They also say an update is coming in April. They also don't account for the ACA PTC repayment part of the American Rescue Plan so I don't get why they say they are final. I hate to waste my time if it is just a matter of waiting for updates.

What leads me to believe there is a software issue is line 4a (IRA Distributions) shows the correct amount of the distribution. 4b (Taxable part) is more than 4a when it should be less due to the repayment and the basis.
Alan S.
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by Alan S. »

michaeljc70 wrote: Fri Mar 19, 2021 5:26 pm I took a ~90k distribution using the CARES Act (to make it penalty free). I paid back $30k already. H&R Block (Windows version) seems to be counting the amount 2x. It is taking it from the 8606 once (without the repayment deducted) and once from the 8915-E (with the repayment deducted). This tIRA has a basis of 11,440 and a value of $750k. How should this be showing up? I know I should get a small break due to having some basis and that takes place on the 8606.

H&R Block's website says all these forms are "final". They also say an update is coming in April. They also don't account for the ACA PTC repayment part of the American Rescue Plan so I don't get why they say they are final. I hate to waste my time if it is just a matter of waiting for updates.

What leads me to believe there is a software issue is line 4a (IRA Distributions) shows the correct amount of the distribution. 4b (Taxable part) is more than 4a when it should be less due to the repayment and the basis.
Re line 6 of the 8606, did you reduce the year end value by 30k?
For line 7 does the 8606 show 90k?

Form 8915 E - figures should roughly be line 13 88,600; 15 0 (note that this includes no amounts from the 8606); 16 88,600; 17 29,533; 18 30000; 19 0
I assume you are electing to report the income over 3 years, so if you repaid 1/3 which is credited to your 2020 taxes, line 19 should be 0.

Again, my numbers are rough, so if there are any major differences, please advise.
Topic Author
michaeljc70
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by michaeljc70 »

Alan S. wrote: Sun Mar 21, 2021 5:14 pm
michaeljc70 wrote: Fri Mar 19, 2021 5:26 pm I took a ~90k distribution using the CARES Act (to make it penalty free). I paid back $30k already. H&R Block (Windows version) seems to be counting the amount 2x. It is taking it from the 8606 once (without the repayment deducted) and once from the 8915-E (with the repayment deducted). This tIRA has a basis of 11,440 and a value of $750k. How should this be showing up? I know I should get a small break due to having some basis and that takes place on the 8606.

H&R Block's website says all these forms are "final". They also say an update is coming in April. They also don't account for the ACA PTC repayment part of the American Rescue Plan so I don't get why they say they are final. I hate to waste my time if it is just a matter of waiting for updates.

What leads me to believe there is a software issue is line 4a (IRA Distributions) shows the correct amount of the distribution. 4b (Taxable part) is more than 4a when it should be less due to the repayment and the basis.
Re line 6 of the 8606, did you reduce the year end value by 30k?
H&R Block does that automatically (or is supposed to). The issue is line 5c is for repayments and it is calculated and has no value and I cannot enter one (without overriding). When I click to see the source of where it gets this from it tells me nothing. The repayment does show on the 8915-E (I entered it on line 18). But as you and the directions indicate that amount should be less the repayment even though the repayment was in 2021.

For line 7 does the 8606 show 90k?
Yes

Form 8915 E - figures should roughly be line 13 88,600; 15 0 (note that this includes no amounts from the 8606); 16 88,600; 17 29,533; 18 30000; 19 0
I assume you are electing to report the income over 3 years, so if you repaid 1/3 which is credited to your 2020 taxes, line 19 should be 0.
Line 13 is zero. That is calculated by the software. That amount is showing on line 15 & 16 (also calculated) without my basis being taken into account ($90k). Line 19 is ~$60k. I opted to not spread the income over 3 years so I am expecting to pay tax on around $60k less a small amount due to the basis in the tIRA. I think the $60k is wrong because it doesn't take into account my basis and line line is labelled "Amount subject to tax".


Again, my numbers are rough, so if there are any major differences, please advise.
Thanks for the response. I know this is getting into the weeds. See above. I am going to wait for the next update (4/7) and if I can't get this working I may have to just start overriding things. The negative is I cannot e-file then. I know what I should be paying tax on which is the net distribution minus around $1k for the basis. I could easily do this manually which might turn out to be less work.
Alan S.
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by Alan S. »

If line 13 is fed from 15b of Form 8606, that 15b should be just under 89k. Does it show that?

I agree with your conclusions regarding the expected outcome. Since the small basis is not being applied, that points to an issue with Form 8606. 15b is fed from all the earlier lines on the 8606 starting with line 2. Suggest you recheck the 8606 for any possible errors.

Election of reporting all income in 2020 suggests you expect your marginal rate in 2020 to be lower than the next 2 years. You could still repay more up to 3 years from the distribution date, but would then have to amend 2020 for a refund. The decision to report all unrepaid income in 2020 becomes irrevocable on the due date of 5/17/2021 assuming that you do not extend.

I have been curious how many issues would surface when a CRD is reported with IRA basis. Yours is the first post I have seen, so this is interesting.
Topic Author
michaeljc70
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by michaeljc70 »

Alan S. wrote: Mon Mar 22, 2021 1:55 pm If line 13 is fed from 15b of Form 8606, that 15b should be just under 89k. Does it show that? No, it shows 0.


I agree with your conclusions regarding the expected outcome. Since the small basis is not being applied, that points to an issue with Form 8606. 15b is fed from all the earlier lines on the 8606 starting with line 2. Suggest you recheck the 8606 for any possible errors.
15b is the disaster portion which is all of it in my case. It doesn't ask for that on 8606. It says it comes from 8915-E. For whatever reason it isn't transferring. According to the IRS instructions "If all your distributions are qualified disaster distributions, enter the amount from line 15a on line 15b." So, it should be transferring from the 8915-E but it isn't.


Election of reporting all income in 2020 suggests you expect your marginal rate in 2020 to be lower than the next 2 years. You could still repay more up to 3 years from the distribution date, but would then have to amend 2020 for a refund. The decision to report all unrepaid income in 2020 becomes irrevocable on the due date of 5/17/2021 assuming that you do not extend.

I was going to spread this over 3 years. It is very unlikely I pay any more back (I'm retired and most of my money is in my tIRA). It is to my benefit to report it all for 2020 due to 1) my spouse earned less (from part time job and the 10.2k unemployment exclusion and 2) not having to pay back the ACA premium credit. All of this will fall into the 12% bracket plus no ACA PTC impact.

I have been curious how many issues would surface when a CRD is reported with IRA basis. Yours is the first post I have seen, so this is interesting.
See above. I have a version I overrode a few entries that I can mail in if the next update doesn't fix this. I guess I could also delete the 8606 and 8915-E and start over and see if I get a different result due to user error from the first time.
bodgiesd
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by bodgiesd »

WHEN did you payback the $30k?
AFAIK If it’s after Dec 31 2020, the $30k repayment amendment can be added to your 2021 tax return for 2022.
gtaylor
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by gtaylor »

michaeljc70 wrote: Mon Mar 22, 2021 9:15 am I am going to wait for the next update (4/7) and if I can't get this working I may have to just start overriding things. The negative is I cannot e-file then.
"Good" news, you already can't efile now!

The IRS does not provide XML schema for tax software to efile form 8915-E in the usual way. They do provide two alternatives, including "attach a PDF to the efiling" and "send us a block of plaintext kind of like this example".

https://www.irs.gov/forms-pubs/alternat ... -form-7202

Internet chatter suggests that many programs have been updated to implement one or the other of these alternatives. (One might think these would be stock alternatives already implemented and applicable to any new form, but what do I know).

However, Internet chatter also includes people complaining that H&R Block can't do this; no one has been able to efile with 8915e, and worse people have gotten the brush off or the specific answer "we'll never have that and yes you may have a refund since it won't efile" from H&R customer service.

I find the lack of efile less irritating than the lack of interview support. My own case is similar, or actually much simpler, since there is only a distribution with zero taxable dollars and no penalty even in normal times. So I ought to be able to type in "90,000" somewhere, or maybe check a box for "yes this is all a CARES distribution", pick one year tax treatment, and be done. But no, it seems not to have interview support, only the form to do the old fashioned way. I am hoping that "final" means just the form and not the interview...
Topic Author
michaeljc70
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by michaeljc70 »

bodgiesd wrote: Tue Mar 23, 2021 6:05 am WHEN did you payback the $30k?
AFAIK If it’s after Dec 31 2020, the $30k repayment amendment can be added to your 2021 tax return for 2022.
January 2021. The instructions are pretty clear: "Enter the total amount of any repayments you made before filing your 2020 tax return. But don’t include repayments made later than the due date (including extensions) for that return." There is no option to apply the payment to 2021.
Topic Author
michaeljc70
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by michaeljc70 »

gtaylor wrote: Tue Mar 23, 2021 8:04 am
michaeljc70 wrote: Mon Mar 22, 2021 9:15 am I am going to wait for the next update (4/7) and if I can't get this working I may have to just start overriding things. The negative is I cannot e-file then.
"Good" news, you already can't efile now!

The IRS does not provide XML schema for tax software to efile form 8915-E in the usual way. They do provide two alternatives, including "attach a PDF to the efiling" and "send us a block of plaintext kind of like this example".

https://www.irs.gov/forms-pubs/alternat ... -form-7202

Internet chatter suggests that many programs have been updated to implement one or the other of these alternatives. (One might think these would be stock alternatives already implemented and applicable to any new form, but what do I know).

However, Internet chatter also includes people complaining that H&R Block can't do this; no one has been able to efile with 8915e, and worse people have gotten the brush off or the specific answer "we'll never have that and yes you may have a refund since it won't efile" from H&R customer service.

I find the lack of efile less irritating than the lack of interview support. My own case is similar, or actually much simpler, since there is only a distribution with zero taxable dollars and no penalty even in normal times. So I ought to be able to type in "90,000" somewhere, or maybe check a box for "yes this is all a CARES distribution", pick one year tax treatment, and be done. But no, it seems not to have interview support, only the form to do the old fashioned way. I am hoping that "final" means just the form and not the interview...
Good to know there is no reason to even worry about e-filing. :oops:
neo_ny
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by neo_ny »

michaeljc70 wrote: Fri Mar 19, 2021 5:26 pm I took a ~90k distribution using the CARES Act (to make it penalty free). I paid back $30k already. H&R Block (Windows version) seems to be counting the amount 2x. It is taking it from the 8606 once (without the repayment deducted) and once from the 8915-E (with the repayment deducted). This tIRA has a basis of 11,440 and a value of $750k. How should this be showing up? I know I should get a small break due to having some basis and that takes place on the 8606.

H&R Block's website says all these forms are "final". They also say an update is coming in April. They also don't account for the ACA PTC repayment part of the American Rescue Plan so I don't get why they say they are final. I hate to waste my time if it is just a matter of waiting for updates.

What leads me to believe there is a software issue is line 4a (IRA Distributions) shows the correct amount of the distribution. 4b (Taxable part) is more than 4a when it should be less due to the repayment and the basis.
What is the exact mechanism you used to pay it back? Do you just check the option that it is a typical "rollover" and transfer the repayment amount from your linked checking account, for instance? I am trying to do this on Vanguard. Any help appreciated, thanks!
Topic Author
michaeljc70
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by michaeljc70 »

neo_ny wrote: Tue Mar 23, 2021 8:32 am
michaeljc70 wrote: Fri Mar 19, 2021 5:26 pm I took a ~90k distribution using the CARES Act (to make it penalty free). I paid back $30k already. H&R Block (Windows version) seems to be counting the amount 2x. It is taking it from the 8606 once (without the repayment deducted) and once from the 8915-E (with the repayment deducted). This tIRA has a basis of 11,440 and a value of $750k. How should this be showing up? I know I should get a small break due to having some basis and that takes place on the 8606.

H&R Block's website says all these forms are "final". They also say an update is coming in April. They also don't account for the ACA PTC repayment part of the American Rescue Plan so I don't get why they say they are final. I hate to waste my time if it is just a matter of waiting for updates.

What leads me to believe there is a software issue is line 4a (IRA Distributions) shows the correct amount of the distribution. 4b (Taxable part) is more than 4a when it should be less due to the repayment and the basis.
What is the exact mechanism you used to pay it back? Do you just check the option that it is a typical "rollover" and transfer the repayment amount from your linked checking account, for instance? I am trying to do this on Vanguard. Any help appreciated, thanks!
No. I used the TDA form and checked the box "CARES Act Repayment" and mailed it to them with a check. According to them there is no way to do it electronically. Other companies might have other methods.
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michaeljc70
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by michaeljc70 »

I got the latest update from H&R today. However, it still doesn't work correctly. The issue is on the 8606 line 15b it says to put the amount attributable to disaster relief. The software is not doing that resulting in double taxation. It has 0 on that line.

According to the 8606 directions for 15b:
If all your distributions are qualified disaster distributions, enter the amount from line 15a on line 15b.

Aggravating. I don't want to contact them again as it was a waste of time the prior times.
Alan S.
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by Alan S. »

michaeljc70 wrote: Wed Apr 07, 2021 11:33 am I got the latest update from H&R today. However, it still doesn't work correctly. The issue is on the 8606 line 15b it says to put the amount attributable to disaster relief. The software is not doing that resulting in double taxation. It has 0 on that line.

According to the 8606 directions for 15b:
If all your distributions are qualified disaster distributions, enter the amount from line 15a on line 15b.

Aggravating. I don't want to contact them again as it was a waste of time the prior times.
Obviously, the HRB tax program was not written to handle the interaction between 8606 and 8915 E. Seems like in completing the 8606 there should be an option to indicate what % of the IRA distributions were disaster distributions, so that the 8606 could be fully complete before entering 8915 E data.

Anyway you can override 15b? If not, what is Plan B?
1) Try another vendor like Turbotax?
2) File a paper return?
3) Continue with HRB but omit the 8606, and use your IRA basis later? That would be moot if you eventually repaid the entire CRD.
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michaeljc70
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Re: CARES Act IRA Distribution/repayment - Tax Software

Post by michaeljc70 »

Alan S. wrote: Wed Apr 07, 2021 3:19 pm
michaeljc70 wrote: Wed Apr 07, 2021 11:33 am I got the latest update from H&R today. However, it still doesn't work correctly. The issue is on the 8606 line 15b it says to put the amount attributable to disaster relief. The software is not doing that resulting in double taxation. It has 0 on that line.

According to the 8606 directions for 15b:
If all your distributions are qualified disaster distributions, enter the amount from line 15a on line 15b.

Aggravating. I don't want to contact them again as it was a waste of time the prior times.
Obviously, the HRB tax program was not written to handle the interaction between 8606 and 8915 E. Seems like in completing the 8606 there should be an option to indicate what % of the IRA distributions were disaster distributions, so that the 8606 could be fully complete before entering 8915 E data.

Anyway you can override 15b? If not, what is Plan B?
1) Try another vendor like Turbotax?
2) File a paper return?
3) Continue with HRB but omit the 8606, and use your IRA basis later? That would be moot if you eventually repaid the entire CRD.
I printed out and signed my return and I am going to mail it in. It is annoying because I hate writing checks, hate doing anything by mail and paid for e-filing. Of course, it isn't the end of the world and will take less time than I've already put into trying to solve this. I'll probably switch to TT next year. Though I used to use TT and switched to HRB because I got mad about something with TT years ago.....
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