Yes, if you pay back the full amount to the TSP this year then you won't have to include any income in regards to the distribution on your 2021 tax return.
You will also amend your 2020 tax return to get a refund on the taxes paid in regards to the distribution.
Please see this example from the IRS:
"If, for example, you receive a coronavirus-related distribution in 2020, you choose to include the distribution amount in income over a 3-year period (2020, 2021, and 2022), and you choose to repay the full amount to an eligible retirement plan in 2022, you may file amended federal income tax returns for 2020 and 2021 to claim a refund of the tax attributable to the amount of the distribution that you included in income for those years, and you will not be required to include any amount in income in 2022."
@jdkluck
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
