Deductions & credits

@Tuckerlee 

since the repayment was more than $3,000 you can take a credit on your 2023 1040 as follows

 

for federal purposes recompute the federal taxes for 2021 by excluding the payment (you would reduce box 1 wages by the $6K). the decrease in taxes is taken as a credit on schedule 3 line 12d denote as IRC 1341. we need to know the state to determine what the laws are there