You will the gross and not the net pay when you calculate the tax that would have been used if the income had not been included on the original return. Continue to follow the steps for the credit to be applied.
- 8. After you enter the updated income, TurboTax will automatically calculate your updated tax liability. To determine your Claim of Right Credit, subtract the amount of the updated tax liability from the original tax liability.
Next, you’ll apply the credit. To do this, you’ll need the current year of TurboTax Desktop.
Applying the credit
- Return to the current tax year (the credit can only be applied using the Forms mode in TurboTax Desktop).
- Select Forms.
- Choose 1040/1040SR Wks from the list and the worksheet will appear.
- Scroll to the Other Credits and Payments Smart Worksheet (you can find this in a box near the end of the worksheet).
- Enter the credit amount you calculated on Line D, Claim of Right, IRC 1341 credit for repayments of prior year income.
- Select the Step-by-Step or Easy Step icon to return to the interview mode and finish working on your tax return.
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