Here's how to enter an itemized deduction for a claim of right repayment in TurboTax. (The deduction can only be claimed for a repayment of more than $3,000. You said you paid $4,000.) I offer no opinion on whether this is the proper way to report a TEQ payment, but these steps will let you enter a claim of right deduction on Schedule A line 16.
- Go to Deductions & Credits.
- On the screen "Your 2023 Deductions & Credits," scroll all the way down to the last section, "Other Deductions and Credits."
- Click the Start button for Other Deductible Expenses.
- The first screen asks if you paid generation-skipping taxes. If you didn't, click No.
- The next screen asks if you had any "less common expenses," one of which is a repayment of $3,000 or less. You repaid more than $3,000, so click No.
- The next screen asks "Did you have any of these other expenses?" One of the expenses listed is "Claim of right repayment over $3,000." Click Yes.
- On the next screen, enter the amount that you repaid in 2023 in the second box, labeled "Claim of right repayment over $3,000." Then click Continue.
The deduction will appear on Schedule A line 16 with the description "Claim repayments."
Do not send any receipts or other "proof" with your tax return. The IRS does not want explanations that are not required by IRS rules. The IRS instructions for Form 1040 say "Don't attach correspondence or other items unless required to do so." If the IRS wants more information they will send you a letter asking for it.
