If the amount you repaid was more than $3,000, you can deduct the repayment as an other itemized deduction on Schedule A (Form 1040), line 16, if you included the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. However, you can choose to take a credit for the year of repayment.
Taxable and Non-Taxable Income see page 34
Since you repaid the taxable amounts in 2020, the amounts repaid are entered as an itemized deduction on Schedule A or as a tax credit on Form 1040 as a Claim of Right IRC 1341, depending on the amount repaid.
To report the repayment of taxable income as an itemized deduction on Schedule A -
- Click on Federal Taxes (Personal using Home and Business)
- Click on Deductions and Credits
- Click on I'll choose what I work on
- Scroll down to Other Deductions and Credits
- On Other Deductible Expenses, click on the start or update button
-
(If the repayment was greater then $3,000) On the next screen, click on No (Less Common Expenses)
On the next screen, click on Yes (Any Other Deductions)
On the next screen, enter the amount repaid in the box for Claim of Right repayment. Continue with this section until it completes.
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