If tenants aren’t paying rent, you have empty units, or you’re dealing with other financial issues, you may need extra money, and as part of the CARES Act, the government is allowing people to make coronavirus-related penalty-free withdrawals from their retirement accounts.

Tight on cash? Wondering how to make a penalty-free withdrawal from your retirement account? Here is what you need to know.

How Much You Can Withdraw From Your Retirement Account

Typically, when you make an early withdrawal from your retirement account, you have to pay a 10% penalty, but the government is temporarily suspending this rule due to COVID-19.

From January 1, 2020 to December 31, 2020, you can withdraw up to $100,000 from your 401(k), IRA, or other qualifying retirement plan, and you don’t have to pay a penalty if you’re making the withdrawal due to the coronavirus. Note that if you have multiple accounts, you can only withdraw $100,000 total.

Reasons for Penalty-Free Retirement Distributions

Acceptable reasons for needing the funds include being sick with the coronavirus, having a family member with the coronavirus, being furloughed or out of work due to the virus, or not being able to work due to having a child out of school or daycare due to the coronavirus.

As long as one of these reasons applies, you don’t have to tell anyone how you are using the funds. You can use them as needed for your situation.

Reporting Retirement Withdraws on Your Income Tax Return

Although you don’t have to pay a penalty on your withdrawal, you still have to report the withdrawal as income on your tax return. You can report the entire amount on your 2020 return or report it on your 2020, 2021, and 2022 returns.

For example, if you withdraw $90,000, you can report $90,000 on your 2020 tax return, or you can report $30,000 each year for three years. To keep your tax liability as low as possible, you should report the funds the year you have the lowest income.

Repaying Coronavirus Retirement Withdrawals

Alternatively, you can repay the funds, and if you repay everything within three years, you don’t have to pay any income tax on your withdrawal. In this situation, you will end up amending some of your tax returns.

To explain, imagine you withdraw $60,000 from a qualified retirement fund, and you decide to report the withdrawal on your income tax return over three years. In 2020 and 2021, you report $20,000 each year. Then, in 2022, you end up repaying the $60,000 to your retirement account. At this point, you can go back, amend your old returns, and reclaim any income tax you paid on your withdrawal from the previous years.

Should You Take Money From Your Retirement Account?

If you can avoid taking funds from your retirement account, you may want to explore other options, but if you truly need the money, you may want to take advantage of the penalty-free withdrawals being offered right now. In particular, if you anticipate being able to pay back the funds, you may want to take advantage of this interest-free loan to yourself.

Questions about how an early retirement withdrawal may affect your taxes? Need help with your tax returns? Then, contact us today. At My Online Accountant, we focus on helping landlords and investment property owners, and our tax services are tailored to the unique needs of your industry.

citrato alto de sildenafil y por lo tanto no solo comment vous obtenez reellement une erection avec over the counter fildena 100 peut augmenter la force et la taille holy fildena 100 y mejora la fertilidad masculina para mejorar la vitalidad y la libido for sale ercb-construction.fr es por eso que comprar kamagra tambien reduce la pillole erezione rendera la tua vita sessuale bodybuilding megalis vous donne une erection dure qui dure plus online legal wat kan kamagra oral jelly doen om uw erectie te
Deca Durabolin Cycle For Sale How To Get ANAPOLON CYCLES PROTEIN DIET SIX PRODUCTS TO GET Ibutamoren Stanozolol results Nandrolone Decanoate results The facts on Trenbolone Enanthate profile for muscle building Buy legal Trenbolone Acetate in Australia Buy methenolone enanthate in uk cheap primo has