How do I enter qualified disaster retirement plan distributions and repayments in Drake Tax?
Qualified Disaster Retirement Plan Distributions and Repayments Forms 8915-A, 8915-B, 8915-C, 8915-D, and 8915-E are available in Drake Tax. Per the instructions, "Use Form 8915 if you were adversely affected by a qualified 20YY disaster and you received a distribution... that qualifies for favorable tax treatment."
Form eligibility and data entry varies depending on the year of Drake Tax being used:
- Use Form 8915-A for distributions that were taken for disasters that occurred in 2016.
- Use Form 8915-B for distributions that were taken for disasters that occurred in 2017.
- Use Form 8915-C for distributions that were taken for disasters that occurred in 2018.
- Use Form 8915-D for distributions that were taken for disasters that occurred in 2019.
- Use Form 8915-E for distributions that were taken for disasters that occurred in 2020 (including Coronavirus-related distributions).
Screens for these forms can be accessed in the program by clicking the available link on screen 1099, or by clicking the following screen links from the Adjustments tab of the Data Entry Menu:
Note: The 1099 screen only provides a link to the two most current qualified disaster forms. For other years, access the screen(s) directly from the adjustments tab.
In Drake Tax:
- Enter the distribution on screen 1099.
- Select the Exclude here; distribution is reported on 8915E check box.
- If the distribution qualifies for an exception to the 10% penalty:
- Check the box Carry this entry to Form 5329 and compute 10% penalty or exception.
- On the 5329 screen, exception code 12 (other) indicates that it was a "Coronavirus-related distribution." If another exception applies, choose that code in the drop list.
- Enter the applicable amount in the box Early distributions not subject to additional tax.
- Use the appropriate screen(s) (8606, ROTH, 915A, 915B, 915C, 915D, or 915E) to accurately report the distribution and/or repayment.
- For example, on the 915E screen,
- TS box: select T
- In the ST drop list, choose the relevant state.
- Check the Coronavirus box.
- In row 1, 2, and/or 3, enter amounts under the columns as applicable:
- Total Distributions in 2020 (prevents EF message 2535).
- Qualified 2020 disaster 1 distributions made in 2020
- Qualified 2020 disaster 2 distributions made in 2020 (only if multiple distributions received).
- Allocation of column (b) disaster distributions (override-- see field help before using).
- Enter the Date earliest distribution made (prevents EF messages 2532, 2533, or 2534).
- The software will automatically spread the taxable amount over the next three years.
- If the taxpayer would rather report the full taxable amount in 2020, apply this election by checking box 9 or 17 based on the type of plan.
- If distribution amounts were paid back prior to filing the 2020 return, enter those amounts on line 10 or line 18, as applicable.
Note: If the distribution comes from an IRA that must be reported on Form 8606, complete that screen first. Use the applicable box 15b on screen 8606 to indicate what amount is included on Form 8915, Part III. Roth disaster distributions that should flow to Form 8915, Part III, should be entered on the appropriate line 25b of the ROTH screen. Complete Part I of the appropriate 8915 screen. Also complete any other applicable parts of these screens.
For a demonstration, watch the video Disaster Relief for 2020.
Common Issues - Form 8915-E
For Form 8915-E, EF message 2532, 2533, or 2534 will generate if the date earliest distribution made has not been entered in the applicable field. Note that this is not the disaster beginning date.
If no entry is made in the column Total Distributions in 2020, EF message 2535 is generated and the taxable amount is not calculated on Form 8915-E, line 11. Return to screen 915E and enter amounts in the column Total distributions in 2020 as applicable. EF message 2535 states:
Review Data Entry: "Disaster Distributions" cannot be greater than "Total Distributions." Return to screen 915C, 915D, or 915E and correct your entries.