If the employee’s last paycheck details the deduction, then the employee has certainly deducted the amount from income in the year of repayment.
However, since the amount repaid was under $3,000, the employee will no longer be able to claim a miscellaneous itemized deduction because of the changes under the 2017 Tax Cuts and Jobs Act.
See this statement in IRS publication 17, Repayments, page 89
“Beginning in 2018, you can no longer claim any miscellaneous itemized deductions, so if the amount repaid was $3,000 or less, you are not able to deduct it from your income in the year you repaid it.”
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