Refund of overpayment made on a 1099 B

[JamesG1]

“If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it.  If the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. In most cases, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction.”

From IRS publication 525 pages 34 and 35.

In addition, this TurboTax Best answer addresses a repayment of over $3,000.

There are two options, but the right of claim credit is more attractive to taxpayers since itemizing deductions is not available to taxpayers after the implementation of the Tax Cuts and Jobs Act of 2017. 

• Determine your tax on the previous tax year when the refunded amount was reported as income. 
• Then recompute that same tax return without the income that was repaid. 
• That dollar amount difference is the amount of the credit on the current year tax return.