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.
