CRD repayments Notice 2020-50

Forgive me if this topic has been covered.

Assume I receive a $75,000 CRD in 2020 and spread income over 3 years. Then I decide to recontribute $25,000 of the CRD.

Notice 2020-5, in Section 4E, says that if I make the repayment before the due date (plus extensions) for the 2020 tax return , I can wipe out the $25,000 for 2020.  The same would be true for the 2021 and 2022 returns.

But if I make the repayment after the 2020 tax return deadline (but within 3 years), can't I still have the 2020 income wiped out by filing an amended 2020 return? Or is it too late?

The Notice doesn't address this. And the fact that the IRS does specifically address amended returns in Section 4D (when the CRD is all included in 2020) gives me pause.

Any thoughts?

On 7/25/2020 at 10:14 AM, Ian said:

But if I make the repayment after the 2020 tax return deadline (but within 3 years), can't I still have the 2020 income wiped out by filing an amended 2020 return?

Yes

On 7/25/2020 at 10:14 AM, Ian said:

But if I make the repayment after the 2020 tax return deadline (but within 3 years), can't I still have the 2020 income wiped out by filing an amended 2020 return? Or is it too late?

The Notice doesn't address this.

It does address this, but there are some additional requirements. Section 4F.  

Quote

If a qualified individual using the 3-year ratable income inclusion method recontributes an amount of a coronavirus-related distribution for a tax year in the 3-year period that exceeds the amount that is otherwise includible in gross income for that tax year, as described in section 4.E of this notice, the excess amount of the recontribution is permitted to be carried forward to reduce the amount of the coronavirus-related distribution that is includible in gross income in the next tax year in the 3-year period. Alternatively, the qualified individual is permitted to carry back the excess amount of the recontribution to a prior taxable year or years in which the individual included income attributable to a coronavirus-related distribution. The individual will need to file an amended federal income tax return for the prior taxable year or years...

If you make a payment after the 2020 tax return due date, that payment will first have to satisfy the 2021 repayment amount.  Any payment in excess of the amount includible in income for 2021 can be applied to 2020 and/or 2022.  

Thanks. That much I understand.

But what if do the three-year spread but decide, after filing my 2020 return, that I want to reduce my 2020 taxable income -- not my 2021 income. Notice 2020- 50 doesn't seem to say that I can apply repayment to 2020 and amend my 2020 return in that situation. It seems to require that repayment be applied to 2021. Or, am I missing something?

Also, what happens if I repay more than 2/3 of my CRD before the timely filing of my 2021 return. I assume the first 1/3 of the repayment is automatically applied to 2021. For the remainder, can I allocate it any way I want between a 2020 carryback and a 2022 carryforward?

Thanks for your help.

5 minutes ago, Ian said:

But what if do the three-year spread but decide, after filing my 2020 return, that I want to reduce my 2020 taxable income -- not my 2021 income. Notice 2020- 50 doesn't seem to say that I can apply repayment to 2020 and amend my 2020 return in that situation. It seems to require that repayment be applied to 2021. Or, am I missing something?

That is correct.  Payments made after the 2020 tax return due date (As extended), cannot reduce the distribution amount included in income for 2020 until you have reduced the 2021 amount to be included in income.  Excess recontributions for a given year can be carried back to a prior year or forward to a subsequent year.

Thanks, appreciate it.