If you received taxable income in 2020 and paid all or a portion back in 2021, you qualify for a claim of right repayment.
A claim of right repayment occurs when a taxpayer is required to repay income that they had reported and paid tax on in a previous tax year. The repayment must be of funds that, when received, the taxpayer had a reasonable belief he or she had unrestricted access to.
If you have an amount of $3,000 or less, follow these steps.
- Go to Federal / Deductions & Credits / Your tax breaks / Other Deductions and Credits / Other Deductible Expenses.
- Click Start / Revisit to the right.
- At the screen Did you have any of these less common expenses? select Repayments of $3,000 or less.
If you have an amount of $3,000 or more, follow these steps to report a deduction on line 16 of Schedule A Itemized Deductions.
- Go to Federal / Deductions & Credits / Your tax breaks / Other Deductions and Credits / Other Deductible Expenses.
- Click Start / Revisit to the right.
- At the screen Tell us about your other expenses, select Claim of right repayment over $3,000.
Payment of an amount of $3,000 or more may also be made by a credit on the 2021 Federal 1040 tax return. Computation of the credit option is outlined here by KristinaK.
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