Get your taxes done using TurboTax

If your relocation package is more than $3,000 you have the option of claiming the repayment as a deduction or tax credit.

How the credit works

Claiming the tax credit is more complicated but usually saves more money. To compute the credit you will have to subtract your relocation bonus amount from your 2020 return and get the new tax liability. If you used TurboTax , you can use amend your return and change the number (you're not actually amending so change the numbers back after you're done). The difference between the old and new tax liability is the credit amount applied to your 2021 return. 

For example if your tax liability was $5,000 including relocation and $4,000 without, your tax credit is $1,000. You will need TurboTax CD/Download to enter this credit on your tax return.

Using TurboTax

TurboTax Alumni Expert @KathrynG3  shows you how in paying back sign on bonus. Follow the steps in Option 2.

She writes: 

To enter a credit, you will need to convert to TurboTax CD/Download. Go to Forms Mode. Scroll down to 1040/1040SR Wks. Enter the amount of tax. . . on Schedule 3, Line 12d under Other. See the screen shot.

TurboTax explains: 

Schedule 3, Line 12 - Other Credits and Payments Smart Worksheet:

Line D - if you have a repayment treated as a credit, enter the amount allowable here. The program includes the amount on line 13, checks box 13d, and prints the text "I.R.C. 1341" to the right of box 74d. See Pub 525.