If you received income in a previous year that you were believed you were legitimately entitled to, and then had to pay it back in 2015, there are two methods to deduct that from your income. If the amount was less than $3000, it is a misc deduction subject to the 2% rule, so many people will not benefit.
If the amount of repayment is more than $3000 you have two methods to deal with the repayment. One is to deduct the income as a misc itemized deduction NOT subject to the 2% rule. The other method is to figure out how much less income tax you would have owed in the year you received the income, and take that amount as a direct tax credit instead of a deduction. If you earned over $50,000 and have more than $6200 (single) or $12,400 (joint) of itemized deduction, then both methods will have the same result. But if you don't normally itemize your deductions, or if your income this year is much less than the year you got the income, then the direct credit may save you more money. This is the claim of right credit.
