If you paid back over $3,000 then you have an option. If you are itemizing deductions, choose the deduction. Most people compute the credit.
This is how:
- You will look at the tax liability for year 20xx when the original payment was made.
- Change the income by the amount repaid.
- Look at the new tax liability.
- Subtract the two and take the difference as a credit this year. It is IRC1341
See Repayment over $3,000 & What is a claim of right repayment?
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