Question

Amend 2020 taxes due to 401k Covid disbursement

Forum|Forum|5 years ago
March 19, 2021
1 reply
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My husband cashed out a 401K in 2020 worth $49,000. We are over 60, so we pay no penalty but we did have taxes withheld. When filing our 2020 return we DID NOT take advantage of the disaster option to split the income and tax liability in thirds even though we did this because of a Covid related reduction in hours for my job. We used the money to pay off a second mortgage on our primary residence.

This disbursement pushed us to $159,807.00 AGI for 2020; disqualifying us for the third stimulus check as well as the $10,200 unemployment tax break. BTW, we also had to pay Federal $1300+.

Should we/can we amend our 2020 return, taking advantage of the 401k disaster disbursement rule, and receive the third stimulus, the unemployment tax break, and a possible refund of part of the $1300 already paid?

Not A Product Question

CatinaT1

Yes! You'll want to amend your return. The third stimulus will not be part of the amendment and it's unclear if the IRS will automatically sent the third stimulus based on an amendment or if you will have to wait to claim it on your 2021 return.

To avoid unnecessary delays, do not amend until your original return has been fully processed. 
You can e-file your 2020 amended federal tax return, but most states require amendments to be printed and filed by mail.
Allow 16 weeks for processing.

See this TurboTax FAQ for help with amending.

You can check the status of your amended return here, but allow 3 weeks after filing for it to show up.

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