Issue 55647

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Include a chart of the various Forms 8915 and when each is to be completed. See attachment 1. Justification It is confusing for a taxpayer to figure out which form to complete for prior years’ disasters.

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Recommendation Consider including the worksheets as part of the form. Justification: Many new forms include worksheets in the instructions and then include them in the actual form in future versions of the form. IRS requires the taxpayer to include completed worksheets in the return. Taxpayers completing their own return may not be aware that the worksheets should be attached to the return which could cause processing issues for the IRS. There is no guidance on how to attach the worksheets if Form 8915F is e-filed. Creating a form should eliminate the issue of attaching worksheets to an e-filed return.

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Recommendation: Add hyperlinks to each word or phrase that refers the taxpayer to another portion of the instructions. Justification: Adding hyperlinks will reduce the amount of time a taxpayer is looking for the information. The Form instructions are 35 pages and looking through all the pages for the word or phase would be time-consuming.

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Recommendation: Add a Table of Contents in the instructions.

Justification: Adding a Table of Contents will reduce the amount of time a taxpayer is looking for the information. The Form instructions are 35 pages and looking through all the pages for the word or phase would be time-consuming.

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Current Text: See Qualified disaster area, later, for information on where to find a disaster’s FEMA number, beginning date, and declaration date. Recommendation: You can find a disaster’s FEMA number, beginning date, and declaration date by going to: FEMA.gov/disaster/ declarations. See Qualified disaster area, later, for more information. Justification: Adding the web address early in the instructions allows the taxpayer to easily and quickly decide whether they are eligible for a qualified disaster distribution.

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Current Text: The last day of the qualified disaster distribution period for most qualified 2021 disasters and many qualified 2022 disasters is June 26, 2023. But the last day of the qualified disaster distribution period for qualified 2023 and later disasters, some qualified 2022 disasters, and perhaps even a few qualified 2021 disasters will have to be separately calculated. Recommendation: Replace with the following: The last day of the qualified distribution period must be separately calculated for each qualified disaster. Justification: The language is confusing and has too many exceptions to clarify the last date of the distribution period. This may no longer be considered for What’s new?

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Current Text: The last day of the qualified distribution repayment period for most qualified 2021 disasters and many qualified 2022 disasters is June 27, 2023. But the last day of the qualified distribution repayment period for qualified 2023 and later disasters, some qualified 2022 disasters, and perhaps even a few qualified 2021 disasters will have to be separately calculated. Recommendation: Replace with the following: The last day of the qualified distribution repayment period must be separately calculated for each qualified disaster. Justification: The language is confusing and has too many exceptions to clarify the last date of the distribution period. This may no longer be considered for What’s new?

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Recommendation: Add the following language: This does not mean that you will include a different version of the form. You will still use the current version of Form 8915-F. Justification: Taxpayers who use Form 8915-F infrequently may find the naming convention confusing. The naming convention is used throughout the instructions and would have to continually remind themselves of what the name really means.

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Recommendation: See Appendix A for a chart of the name of the form. Justification: There are various Forms 8915, and it is confusing on which form to use. Providing a chart will assist a taxpayer with filing the proper form. A chart is very helpful for visual learners. The content may be within the instructions, but a chart makes it very clear.

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Recommendation: Add: You will use Form 8915-D to report qualified 2019 disaster retirement plan distributions and repayments and Form 8915-C to report 2018 qualified retirement plan distributions and repayments.

Justification: Adds similar language to the 2019 and earlier disasters as the caution was added for the 2020 coronavirus-related and other qualified disaster distributions made in 2020.

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Recommendation: Include charts of the 2021, 2022, 2023 and later qualified disaster distributions.

Justification: The information is in the instructions under What is a Qualified Disaster Distribution? Having a chart will add clarity to the instructions and for the taxpayer.

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Recommendation: Remove the pictorial

Justification: The format of the information wasn’t consistent with FEMA’s current website. FEMA may make changes to its website, and it would be inconsistent with the instruct

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Recommendation: Add the following language: The coronavirus-related distribution repayment period ends on November 19, 2023, which is three years after the date the distribution was received. (See page 5 for the 3-year repayment period)

Justification: Adding the last day to repay the distribution clarifies for the taxpayer when the last time the repayment could be made.

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Recommendation: Add more specifics around the date of the distribution and the repayment period.

Justification: It is unclear from the example when the final repayment period would be.

RECOMMENDATION TEXT:

Recommendation: Add more specifics around the date of the distribution and the repayment period.

Justification: It is unclear from the example when the final repayment period would be. It would be helpful to show to the taxpayer they have three years from the date after the distribution is received to make a repayment. Page 5 of the instructions provides specifics around the date of the distribution and the repayment period but applying the guidance in an example would be extremely helpful to the taxpayer. It makes the example more complete.

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Recommendation: Add the following language: The coronavirus-related distribution repayment period ends on April 14, 2023, which is three years after the date the distribution was received

Justification: Adding the last day to repay the distribution clarifies for the taxpayer when the last time the repayment could be made. Page 5 of the instructions provides specifics around the date of the distribution and the repayment period but applying the guidance in an example would be extremely helpful to the taxpayer. It makes the example more complete

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Recommendation: Add the following language: You have the option to carryback $25,000 to 2022 and $15,000 to 2023.

Justification: Adds clarity to the taxpayer that there are options as to which year the excess repayment can be carried.

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Recommendation: Add the following language: A qualified distribution can be received up to 180 days before the disaster began making the December 14, 2020, distribution a qualified disaster distribution. Repayments for that distribution can be made from the beginning date of the disaster, February 11, 2021, and up to June 27, 2023.

Justification: Explaining why the 2020 distribution was a qualified distribution even though it was received before the disaster is helpful to the taxpayer. Adding the last day to repay the distribution clarifies for the taxpayer when the last time the repayment could be made.

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Recommendation: Add the following language/link: See Are You Claiming Qualified Disaster Distributions on Part I of more than one Form 8915 for this year? if you have the same date checked in item A on page 1 but different dates checked in item B on page 1 for disasters from different years you will need to file separate Form 8915-F for each disaster.

Justification: Adding the language adds clarity for the taxpayer and provides reference to the resolution to the situation later in the instructions.

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Recommendation: Add the following language: You checked box 2023 in Item A and 2021 in Item B.

Justification: Including the language in the example clarifies for the taxpayer how Items A and B would be completed. It also reinforces how the Form is completed.

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Recommendation: Add the following language: You checked box 2023 in Item A and box 2021 in Item B for the 2021 qualified disaster. You checked box 2023 in Item A and box 2022 in Item B on a second Form 8915-F.

Justification: Adding the additional language clarifies for the taxpayer that two Forms 8915-F would be required if disaster losses occurred in different years.

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Recommendation: Add the following language/link: Refer to Worksheet 1B for information on when to use Worksheet 1B.

Justification: The lines don’t inform the taxpayer when to use Worksheet 1B.

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Current Text: You report the remaining$18,000 from the distribution as qualified 2020 disaster distributions in the 2022 Form 8915-F (2022 disasters) portion of your Filled-in Worksheet 1A-1 for Example 1A-1.

Recommendation: You report the remaining$18,000 from the distribution as qualified 2022 disaster distributions in the 2022 Form 8915-F (2022 disasters) portion of your Filled-in Worksheet 1A-1 for Example 1A-1.

Justification: This is a correction to what appears to be a typo.

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Recommendation: Add more specifics around the date of the distribution and the repayment period. Similar to the language that was included in Example 1A-1 which was Qualified disaster distributions can be made from August 18, 2021, through June 26, 2023, for the first disaster and December 23, 2022, through September 10, 2023, for the second disaster.

Justification: It is unclear from the example when the final repayment period would be. The example may not intend to address a repayment scenario but an allocation of the 2021 distribution, it would be helpful to show to the taxpayer they have three years from the date after the distribution is received to make a repayment. Page 5 of the instructions provides specifics around the date of the distribution and the repayment period but applying the guidance in an example would be extremely helpful to the taxpayer. It makes the example more complete.

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Recommendation: Qualified disaster distributions can be made from May 17, 2021, through June 26, 2023, for Disaster 1 and August 26,2021, through June 26,2023, for Disaster 2.

Justification: Adding this language clarifies for the taxpayer why the June distribution didn’t qualify for Disaster 2 since it was before August 26, 2021.

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Recommendation: Move these sections to after the Example 3 for Worksheet 1B.

Justification: All the worksheets would be together and right after the examples. The example would then not be on two pages.

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Current Text: For Disasters that begin after 2023

Recommendation: For Disasters that begin after 2022

Justification: The line skipped a year. The guidance just above this line refers to disaster year 2022.

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Current Text: For Disasters that begin after 2023

Recommendation: For Disasters that begin after 2022

Justification: The line skipped a year. The guidance just above this line refers to disaster year 2022.

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Recommendation: Mosley reports the distribution on his 2022 tax return with Form 8915-F, Part IV, as a qualified distribution.

Justification: The additional language clarifies for the taxpayer which year it is reported.

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Recommendation: Add: For more information on Qualified disaster areas under Repayment of a Qualified Distribution for the Purchase or Construction of a Main see hyperlink.

Justification: Adding the hyperlink will make it quicker for the taxpayer to find the information rather than flipping through 35 pages of instructions.

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Current Text: Enter on line 28 your qualified distributions.

Recommendation: Enter on line 28 your qualified distributions you received for the purchase or construction of a main home in the disaster area.

Justification: The additional language is consistent with the form line 28 and identifies them from other qualified disaster distributions.

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Recommendation: You may use Form 8606 to calculate the cost of both qualified distributions and nonqualified distributions. The cost allocated to both types of distributions would need to be allocated between the qualified distributions and the nonqualified distributions using any reasonable method.

Justification: The additional language will give guidance to the taxpayer on how to allocate between the types of distributions.

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Recommendation: Add example as taxpayer would not know how this works.

Justification: Examples are helpful to illustrate complex issues. Adding an example of how this works would be for the taxpayer to understand the concept.

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Recommendation: Include a reference chart for the name of the form. See attachment 2.

Justification: There are so many versions of the Form a list of all the forms and when they are used would be a great tool for the taxpayer. Attachment 2 lists the year of the form to be used for specific disasters.

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Recommendation: Remove information not relevant to the current tax year. Exhibit A includes information for 2024.

Justification: Including information for future years is irrelevant to the taxpayer when completing the current year tax return. The instructions are updated annually.

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Current Text: A qualified disaster distribution described in Qualified disaster distribution requirements, later, that was made to you this year;

Recommendation: A qualified disaster distribution described in Qualified disaster distribution requirements, later, that you received this year;

Justification: The recommended language change makes it easier to understand. The terminology “made to you” is used throughout the document so we recommend using “you received” throughout. If our recommended language doesn’t cover what was intended by using “made to you” please provide clarification in the instructions as to what it means.

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Current Text: Complete Part IV also in any of the scenarios above if you received qualified distributions this year.

Recommendation: Complete Part IV also in any of the scenarios above if you received qualified distributions for the purchase or construction of a main home in the area of the disaster(s) reported this year.

Justification: Additional language clarifies that Part IV would only be completed if a qualified distribution was for the purchase or construction of a main home in the disaster area.

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Current Text: Complete Part IV if you received qualified distributions this year.

Recommendation: Complete Part IV if you received qualified distributions for the purchase or construction of a main home in the area of the disaster(s) reported this year.

Justification: Additional language clarifies that Part IV would only be completed if a qualified distribution was for the purchase or construction of a main home in the disaster area.

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Recommendation: Eliminate the charts. Refer to Appendix A, Which Lines Should I Use? in the instructions to decide which lines to complete.

Justification: The charts are confusing to the taxpayer. The charts don’t cover all situations for the taxpayer of which lines to complete. For example, the chart doesn’t inform the taxpayer when to complete lines 1 through 11. The Appendix A is more complete. The form will be less cluttered.

RECOMMENDATION TEXT:

Recommendation: Add a line between 4 and 5 column A to list the distributions that aren’t qualified disaster distributions. Column B would be shaded as not necessary. The existing line 5 would then be the difference between the sum of Lines 2-4 and the new line added. An alternative is to reduce lines 2-4 by the distributions that aren’t qualified disaster distributions and then adding a line to add back the distributions that aren’t; qualified disaster distributions to arrive at the amount to report on Line 7.

Justification: The form will flow better when all calculations are done on the form.

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Current Text: Taxable amount. Enter the excess of the sum of lines 2 through 4 in column (a) over the amount on line 6. Report this excess as IRA and/or pension and annuity distributions, as applicable, in accordance with the instructions for your tax return. All or part of the amount on line 7 may be eligible for the tax benefits in Part IV. See instructions.

Recommendation: Enter the excess of the sum of lines 2 through 4 in column (a) over the amount on line 6. All or part of the amount on line 7 may be eligible for the tax benefits in Part IV, Qualified Distributions for the Purchase or Construction of a Main Home in the area of Disaster(s) Listed in Item C. See instructions.

Justification: The instructions say to reduce line 7 by the amount of the distribution included on line 28 in Part IV. In combination with the next recommendation, all calculations will be on the form to report the total taxable distributions between parts I and IV. The taxpayer would not need to write in the qualified distributions for Part IV line 28 as shown in the instructions on Page 16 column 2.

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Recommendation: Add a new line 27: Amount from line 7. Renumber all the other lines. Add a new Line after 32. Add new line Taxable amount:27 less line 28 plus existing line 32. Existing language can be the same as existing language for line 32.

Justification: All calculations are done on the form and the final line on Part IV will be the one that is reported on the tax return.

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Recommendation: Add a box to Line 7 for the qualified distribution for Part IV Line 28.(This is an alternative suggestion to the recommendation for line 7 and page 4)

Justification: Adding the box makes it clear that line 7 is reduced by the amount included in Part IV and the taxpayer doesn’t have to write anything to the left of line 7 as indicated in the instructions.

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Recommendation: Add Part V which can be a summary of all the 8915s filed for the taxpayer for the year and the total of all the forms would be the last line that would be considered as taxable income.

Justification: This is similar to the approach on Form 1116 when the taxpayer files multiple 1116 Forms as a result of having a foreign tax credit from different categories of income. May eliminate having to write amounts used as available distribution on Part I of Form 8915-F as indicated on page 17 Column 1 first bullet point and Step 3 second bullet point.

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Recommendation: Add search function to allow the taxpayer to enter their zip code and find out whether they are in a qualified disaster area.

Justification: Adding the search function will make is easier for taxpayers to know if they qualify for disaster relief benefits. Add to all webpages providing all taxpayers with assistance and relief benefits.

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Recommendation: Create a one-pager Qualified Disaster Relief Tax guide to provide high- level guidance regarding eligibility and tax benefits.

Justification: Taxpayers are already traumatized from disaster events and having a one- page tax guide will be more accessible to the taxpayer to help them quickly know if they qualify.

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Recommendation: Add hyperlink capabilities between the form and instructions on the IRS webpage.

Justification: Currently the forms are static and don’t allow the taxpayer to easily access information provided in the instructions for a particular line.