k man Posted April 7, 2020 Share Posted April 7, 2020 CARES Act says tax is ratable over three years. lets say he pays back the distribution in year 3. what happens to the tax paid? Link to comment Share on other sites More sharing options...
MoJo Posted April 7, 2020 Share Posted April 7, 2020 We're taking the position that the participant needs to handle it. It might mean amending their past returns to recoup taxes paid - unless the IRS comes up with a different approach (doubtful IMHO). Link to comment Share on other sites More sharing options...
k man Posted April 7, 2020 Author Share Posted April 7, 2020 37 minutes ago, MoJo said: We're taking the position that the participant needs to handle it. It might mean amending their past returns to recoup taxes paid - unless the IRS comes up with a different approach (doubtful IMHO). not a CPA but wouldn't the taxpayer be able to use the taxes paid as a credit to apply to income for that year? Link to comment Share on other sites More sharing options...
MoJo Posted April 7, 2020 Share Posted April 7, 2020 18 minutes ago, k man said: not a CPA but wouldn't the taxpayer be able to use the taxes paid as a credit to apply to income for that year? I'm not a CPA either - but I would expect that there may be various ways to recoup. Depends on the amount of taxes one owes as to the best way to recoup it. Taxes on $100k - even if spread over three years might be more than one needs to pay in total. Might be best to get a refund rather than eat it up over time. Link to comment Share on other sites More sharing options...
Bird Posted April 7, 2020 Share Posted April 7, 2020 How do you get a credit if you don't amend the prior return? I've seen a couple of articles/blurbs and it is pretty clear that you have to amend your prior return(s) to get the refund (or credit against then-current taxes I suppose). Ed Snyder Link to comment Share on other sites More sharing options...
EBECatty Posted April 7, 2020 Share Posted April 7, 2020 See page 2 of the Form 8915-B instructions for an analogous situation: https://www.irs.gov/pub/irs-pdf/i8915b.pdf Any repayments after the first year will reduce the amount of ratable income included in the year of repayment. Any repayment in excess of that year's ratable taxable amount can be carried back (by amending prior year's return) or forward. Luke Bailey and C. B. Zeller 2 Link to comment Share on other sites More sharing options...
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