Since you repaid more than $3,000, you can use the method where you claim a credit. It can be complicated depending on how many years were affected. These are the steps:
- Figure your 2020 tax as normal, without deducting the repaid amount.
- Locate prior year taxes that are now incorrect. Note the amount of tax liability.
- Refigure your tax from the earlier year(s) subtracting the income that you have repaid.
- Subtract the difference in tax liability for each year.
- Add all the differences together for your 2020 credit allowed.
- Please see example and full details in my other post.
@atlwal339
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