I am looking for assistance here. Trying to figure out repayment credit or deduction for 2020 tax year. Figuring out if Method 1 or Method 2 to go with. I am Single filer - no dependents and under 65.
In 2019 I was paid $18384 in third party sick pay via W2 and another W2 for $342. I also collected a pension for $1141. Total Income for $19867 minus schedule A $14037 = taxable income $5830 tax =583. I had to pay $687 for that year. In 2020 I had to pay back $18384 which I did. So now in my 2019, I figured the tax without the $18384 and my results are Tax = 0. Now when I look at pub 525. I calculated the tax with and without that $18384 for 2019. With sick pay tax= $583 without sick pay tax = 0. In 2020 I had a W2 for $1666 and Social Security for $45176 which results in no social security being taxable. So total income is $1666 now minus my schedule A $13470 equaling = negative so tax return stops calculating and if I include the $18384 in 2020 as a deduction my Schedule A comes to $31854, again results in no taxable income and tax = 0. Looking at pub 525 and comparing methods not sure if I am due a credit of $583 on my 2020 return or since I have no taxable income to begin with, I am not allowed to take the credit.
2019:
Taxable Income: $5830 (with sick pay minus schedule A)
Tax: $583
2019:
Taxable Income: 0 (without sick pay)
Tax: 0
2020
Taxable Income: 0 (with IRC 1341 deduction added to schedule A)
Tax: 0
2020
Taxable Income: 0 (without IRC 1341 repayment)
Tax: 0
2019
Tax previously determined: $583
Less: Tax as refigured: $0
Decrease in 2019 Tax $583
2020
Regular tax liability for 2020: $0
Less: Decrease in 2019 tax: $583
Refigured tax for 2020: $-583.00 (negative)
Am I allowed to take the $583 on my 2020 tax return or because it results to a negative number I am not allowed to take it.
thanks in advance for your assistance. I know its a long message but I did not want to leave anything out.
taxgal428
