72 T Distribution

[Florida_EA]

Covid 19 distributions is limited to Qualified Individuals

The law defines a qualifying person as someone who:

• Has tested positive and been diagnosed with COVID-19
• Has a dependent or spouse who has tested positive and been diagnosed with COVID-19
• Experiences financial hardship due to them, their spouse or a member of their household:
  • Being quarantined, furloughed or laid off or having reduced work hours
  • Being unable to work due to lack of childcare
  • Closing or reducing hours of a business that they own or operate
  • Having pay or self-employment income reduced
  • Having a job offer rescinded or start date for a job delayed

None of these conditions apply for the person and as such I am assuming that he is not a qualified individual

[Rapid Robert]

None of these conditions apply for the person and as such I am assuming that he is not a qualified individual

I suppose it's possible, but he's probably one of the few 57-year old taxpayers for whom that would not be true (because to be a taxpayer, he has to have taxable income). I don't know where you got the quote about "financial hardship", but the IRS notice and web site refers to "adverse financial consequnces", which is a much broader category.

First of all, "being quarantined" is a self-determined status, unless you have found some legal definition for tax purposes somewhere. If he has an IRA, odds are he suffered "adverse financial consequences" when the stock market tanked earlier this year, and maybe he couldn't discuss his investment choices (to his detriment) with his usual buddies due to being quarantined.

Or, maybe he attended an in-person indoor group gathering, then in an "over abundance of caution" (or, just following the advice of his local government officials) decided to self-quarantine (i.e. stay home). Now he has to pay extra for food delivery since he can't go out grocery shopping. Bingo, "adverse financial consequences".

You also said he needs to increase his income with IRA distributions "for financial reasons".

For myself, I would let the client decide which position they wish to take and I would not spend any time trying to audit it, and I doubt the IRS will either.