If you received the $5,000 unemployment in tax year 2021, you'll have to report it in tax year 2021. If you lose the appeal and have to repay the $5,000 in tax year 2022, you'll be able to claim the $5,000 on your 2022 income tax return as a claim of right repayment.
A Claim of Right Repayment is a deduction you can take in the current tax year if you’re required to pay back income in excess of $3,000 from a previous tax year that you thought you could keep. You reported and paid taxes on the money, not knowing you’d have to pay it back.
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