Covid-19 distribution from 401K can be repaid, but the states....

[Pacun]

I have a client who leaves in MD and when he withdrew $60K from his 401k, the company withheld 0 for the IRS at the request of my client but they told him that they had no choice for MD and they withheld some money. 

Another client in VA got 99K from his 401k and he requested nothing to be withheld for the IRS and state and that request was honored.

As you know, the IRS will allow the distribution to be reported: 1/3 on 2020 tax return, 1/3 in 2021 and 1/3 in 2022 or all in 2020. The taxpayer can send back 1/3 to the 401k plan before filing his/her taxes but before the due date for tax years 2020, 2021, 2022 and pay 0 tax on Federal. I wonder if states will also honor what the Federal government said in the CARES act. 

Maybe we could start a topic on the states that have announced how they will treat those distributions.

[Pacun]

Since no one commented on this post. 

Can you share something that you have researched about covid-19 that will affect this tax season... I mean law changes, credits, etc. I have seen post about SE being deferred for Schedule C filers... Can someone elaborate a bit on that and also mention C corps, partnerships?

 

[TAXMAN]

I too would like to know what some of these states are going to do. Since they are all looking for $. Esp with the Fed unemployment $ and Pension distributions, and deductions paid for by PPP $.

[Lion EA]

A good CAA course is coming up at 2pm today by KnoxTaxes. Register here: https://www.bigmarker.com/taxaroo/Consolidated-Appropriations-Act-of-2021-2-CE-CPE-6dfe5d327564f39f7c7c0791?show_live_page=true

[Pacun]

Too late to register for the course.  I didn't check it yesterday.

 

 

[Lion EA]

It will be on-demand about Monday-ish, per the speakers. Not sure where, but you could start with www.taxpracticepro.com. They also recommend a Facebook group: Covid-19 Best Practice for Tax Pros/Tax Offices. Both speakers will post any updates there. Kathy Morgan for the first two hours was fabulous; I'd known of her but not heard her teach before. John Sheeley is an instructor that I return to, but he got the dryer payroll topics for the last hour today. If you're looking for written material, Tony Nitti writes a lot for Forbes, for example the following was cited in today's class: https://www.forbes.com/sites/anthonynitti/2020/12/25/breaking-down-the-employee-retention-credit-part-1/?sh=45acfb17f3d3 but just go to Forbes.com and search for Tony Nitti. I've been told that CCHCPELink is getting a lot of self-study up re the new CAA, and maybe webinars too, but I haven't looked at their class schedule this month.