If the amount that you repaid is $3,000 or less, under the current tax law there is no tax adjustment for the repayment.
If you repaid more than $3,000, since you are already using itemized deductions, the simplest thing to do is claim an itemized deduction for the repayment.
- Go to Federal Taxes > Deductions & Credits > Other Deductions and Credits > Other Deductible Expenses.
- The first screen asks if you paid any generation-skipping taxes. If you didn't, click No.
- The next screen asks if you had any "less common expenses," one of which is repayments of $3,000 or less. You repaid more than $3,000, so click No.
- The next screen asks if you have certain other expenses. Click Yes.
- On the next screen, enter the total amount that you repaid in the second box, labeled "Claim of right repayment over $3,000." Then click Continue.
- The deduction will appear on Schedule A line 16.
