No. If you pay back $3,000 or more, you can take a credit, IRC 1341, based on what you overpaid this year by claiming the income. If you pay back less than $3,000, you are out of luck.
Here is the basic version:
- Figure your 2021 tax as normal, without deducting the repaid amount.
- Locate prior year taxes that are now incorrect. Note the amount of tax liability.
- Refigure your tax from the earlier year(s) subtracting the income that you have repaid.
- Subtract the difference in tax liability for each year.
- Add all the differences together for your 2021 credit allowed.
- Please see example and full details in my other post.
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