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<blockquote data-quote="SlugSlinger" data-source="post: 3510851" data-attributes="member: 7248"><p>From the link above. Pretty straightforward.</p><p></p><p>The .gov waived the penalty, but not the income taxes. The 401K contributions are pretax of withholdings. The distributions are taxable.</p><p></p><p>Do you plan to repay the distribution? If so, enter the $22,666.67 instead of the $68,000 distribution and see how that impacts the owed taxes. You can also contribute to a traditional IRA to lower your income. This should offset some of the taxes.</p><p></p><p>(enter $22,666.67 even if you do not plan to repay the distribution. this will spread the taxes over 3 years and reduce your marginal income tax rate for 2020.)</p><p></p><p><span style="font-size: 18px"><strong>Q6. When do I have to pay taxes on coronavirus-related distributions?</strong></span></p><p>A6. The distributions generally are included in income ratably over a three-year period, starting with the year in which you receive your distribution. For example, if you receive a $9,000 coronavirus-related distribution in 2020, you would report $3,000 in income on your federal income tax return for each of 2020, 2021, and 2022. However, you have the option of including the entire distribution in your income for the year of the distribution.</p><p></p><p><span style="font-size: 18px"><strong>Q7. May I repay a coronavirus-related distribution?</strong></span></p><p>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.</p><p></p><p>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.</p></blockquote><p></p>
[QUOTE="SlugSlinger, post: 3510851, member: 7248"] From the link above. Pretty straightforward. The .gov waived the penalty, but not the income taxes. The 401K contributions are pretax of withholdings. The distributions are taxable. Do you plan to repay the distribution? If so, enter the $22,666.67 instead of the $68,000 distribution and see how that impacts the owed taxes. You can also contribute to a traditional IRA to lower your income. This should offset some of the taxes. (enter $22,666.67 even if you do not plan to repay the distribution. this will spread the taxes over 3 years and reduce your marginal income tax rate for 2020.) [SIZE=5][B]Q6. When do I have to pay taxes on coronavirus-related distributions?[/B][/SIZE] A6. The distributions generally are included in income ratably over a three-year period, starting with the year in which you receive your distribution. For example, if you receive a $9,000 coronavirus-related distribution in 2020, you would report $3,000 in income on your federal income tax return for each of 2020, 2021, and 2022. However, you have the option of including the entire distribution in your income for the year of the distribution. [SIZE=5][B]Q7. May I repay a coronavirus-related distribution?[/B][/SIZE] 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. [/QUOTE]
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