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Anonymous
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Claim of Right: I received AND repaid relocation benefits in 2020 - it as reported as taxable income. Can I process this as a Claim of Right or is there another process?

 
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ToddL99
Employee Tax Expert

Claim of Right: I received AND repaid relocation benefits in 2020 - it as reported as taxable income. Can I process this as a Claim of Right or is there another process?

If you repaid the relocation benefits in the same year you received them, then you can avoid going through the Claim of Right process. 

 

The relocation benefits were included on your Form W-2. Check with your employer to see if they will issue a  corrected W-2 reflecting repayment.

 

If they won't issue a corrected W-2, you can "back-out" the income with an offsetting adjustment in Other Reportable Income. This won't help you with employment taxes, but will keep your from paying income tax on the amount repaid.

 

To enter the adjustment:  

  • Go to Less Common Income, Miscellaneous Income and Other reportable income. Enter "Lawsuit settlement" in the Search Box and Select "Jump to lawsuit settlement" "to get to this screen ("Lawsuit settlement" is a search term that works)

  • Continue to the screen "Other Taxable Income". Enter the description as "Claim of Right Repay" and the amount as a negative number. Entering "-$ XXXX" here will offset the taxable relocation allowance included on your 2020 Form W-2. These are NOT wages.  

A corresponding negative amount will be entered on Line 8 of your Form 1040.

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1 Reply
ToddL99
Employee Tax Expert

Claim of Right: I received AND repaid relocation benefits in 2020 - it as reported as taxable income. Can I process this as a Claim of Right or is there another process?

If you repaid the relocation benefits in the same year you received them, then you can avoid going through the Claim of Right process. 

 

The relocation benefits were included on your Form W-2. Check with your employer to see if they will issue a  corrected W-2 reflecting repayment.

 

If they won't issue a corrected W-2, you can "back-out" the income with an offsetting adjustment in Other Reportable Income. This won't help you with employment taxes, but will keep your from paying income tax on the amount repaid.

 

To enter the adjustment:  

  • Go to Less Common Income, Miscellaneous Income and Other reportable income. Enter "Lawsuit settlement" in the Search Box and Select "Jump to lawsuit settlement" "to get to this screen ("Lawsuit settlement" is a search term that works)

  • Continue to the screen "Other Taxable Income". Enter the description as "Claim of Right Repay" and the amount as a negative number. Entering "-$ XXXX" here will offset the taxable relocation allowance included on your 2020 Form W-2. These are NOT wages.  

A corresponding negative amount will be entered on Line 8 of your Form 1040.

View solution in original post

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