Tax equalization payment to employer - where can I account for this in the year I paid it? Right of Claim?

in 2016 We had to pay back my husband's previous employer for a tax equalization from 2014. How do I account for that $6,000+ that we paid this year? 

RichardG
New Member

Get your taxes done using TurboTax

If the original payment was included in your income in 2014, you can take a deduction or credit through the claim of right doctrine.

Since the amount of the repayment exceeds $3,000, you have the option of claiming a tax credit instead of taking a tax deduction.  It's a somewhat complex calculation for the credit.  The attached document gives an example of the calculations.

Most taxpayers benefit more from claiming the deduction than the credit.  You can claim the deduction by going to Federal Taxes>Deductions & Credits>Other Deductions & Credits>Other Deductible Expenses.  Proceed through that interview until you reach the question "Do you have any other deductions that are not subject to the 2% limitation?"  Answer yes and enter the deduction on the screen that follows.