Thank you very much. That context is very helpful. A couple of quick follow ups, possibly more for the benefit of others who face this situation:
1. It appears (from your response and publication 525) that there is no option to adjust current year taxes for repayments of prior year benefits if the repayment was less than $3,000. My repayment was $1K, which would put me in this bucket. Is that your understanding as well?
2. If the repayment was over $3,000 (assuming it's a "claim of rights"), the options are to a. itemize a deduction on schedule A or b. recalculate previous year tax and claim a credit. If you don't itemize deductions, which most of don't these days, then option a is also off the table, right?
3. If one chooses to claim a tax credit, am I right in interpreting from your steps below that this is not possible with the online versions of Turbo Tax? You refer to the CD/download, so that's what I'm reacting to.
4. Do you know of a way pass feedback on to the TT product team so that they can hopefully make this clearer in future versions of the software? The way it is now, in the "unemployment/paid family leave" section of income, I answered all of the questions, entered the gross amount of $7K for 2021 unemployment from 1099-G, then entered $1K amount repaid in 2021 when prompted in the wizard. The amount showing for unemployment/paid family leave, where TT summarizes all of my income and expenses in 2021, is $6K. Of course the $7K amount is what is actually transferred to the 1040. This is pretty confusing. I would have expected TT to tell me that the payback amount was too low to impact 2021 taxes and then show the gross amount for 2021 in the software rather than showing the net amount and just adding the gross amount to the 1040.
Thanks again for the detailed explanation. It's not the answer I was expecting or hoping for, but you helped me to get to the detail I needed to understand the discrepancy I was seeing.
