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I repaid Calpers $8000 in 2016 for overpayment to me in 2014. I am retired, tax rate is now lower. Can the 2014 return be amended to take advantage of my 2014 tax rate?

 
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I repaid Calpers $8000 in 2016 for overpayment to me in 2014. I am retired, tax rate is now lower. Can the 2014 return be amended to take advantage of my 2014 tax rate?

No, but since the repayment is greater than $3,000 you can choose a credit or a deduction depending on which is most beneficial and you have the desktop version which will allow you the direct entry of the credit if that works for you.

Use the steps shown below to maximize the best results for your tax return.

Instructions here are specifically for your repayment because it's greater than $3000.

  • Repayment over $3,000If the amount you repaid was more than $3,000, you can deduct the repayment on the same form you originally reported the income on (Form 1040). However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. If you qualify for this choice, figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.
When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Each instance of repayment is not considered separately.

Method 1.   Figure your tax for 2016 claiming a deduction for the repaid amount. If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28.

Method 2.   Figure your tax for 2016 claiming a credit for the repaid amount. Follow these steps.
  1. Figure your tax for 2016 without deducting the repaid amount.
  2. Refigure your tax from the earlier year (the year you originally reported the income) without including in income the amount you repaid in 2016.
  3. Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.
  4. Subtract the answer in (3) from the tax for 2016 figured without the deduction (step 1).
  • If method 1 results in less tax, deduct the amount repaid.
  • If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71.

If you choose a deduction, please enter it here (Method 1):

  • Federal taxes - Deductions & credits - Other deductions and credits - Other deductible expense
  • Please answer YES to "Did you have any other deductions that are not subject to the 2% limitation?"
  • Please enter the amount you repaid under, "Claim of Right Repayment (Only if over $3,000).
  • Click the screenshot attached to enlarge and view

If you choose a credit (This can only be done in the Forms mode of the Desktop version of TurboTax), please enter it here (Method 2-only if greater than $3000):   

  • FORMS - F1040 - Below line 70 is the Other Payments and Credits Smart worksheet
  • Please enter the credit in line D.
  • This credit should show up on F1040, line 71.

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Level 2

I repaid Calpers $8000 in 2016 for overpayment to me in 2014. I am retired, tax rate is now lower. Can the 2014 return be amended to take advantage of my 2014 tax rate?

No, but since the repayment is greater than $3,000 you can choose a credit or a deduction depending on which is most beneficial and you have the desktop version which will allow you the direct entry of the credit if that works for you.

Use the steps shown below to maximize the best results for your tax return.

Instructions here are specifically for your repayment because it's greater than $3000.

  • Repayment over $3,000If the amount you repaid was more than $3,000, you can deduct the repayment on the same form you originally reported the income on (Form 1040). However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. If you qualify for this choice, figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.
When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Each instance of repayment is not considered separately.

Method 1.   Figure your tax for 2016 claiming a deduction for the repaid amount. If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28.

Method 2.   Figure your tax for 2016 claiming a credit for the repaid amount. Follow these steps.
  1. Figure your tax for 2016 without deducting the repaid amount.
  2. Refigure your tax from the earlier year (the year you originally reported the income) without including in income the amount you repaid in 2016.
  3. Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.
  4. Subtract the answer in (3) from the tax for 2016 figured without the deduction (step 1).
  • If method 1 results in less tax, deduct the amount repaid.
  • If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71.

If you choose a deduction, please enter it here (Method 1):

  • Federal taxes - Deductions & credits - Other deductions and credits - Other deductible expense
  • Please answer YES to "Did you have any other deductions that are not subject to the 2% limitation?"
  • Please enter the amount you repaid under, "Claim of Right Repayment (Only if over $3,000).
  • Click the screenshot attached to enlarge and view

If you choose a credit (This can only be done in the Forms mode of the Desktop version of TurboTax), please enter it here (Method 2-only if greater than $3000):   

  • FORMS - F1040 - Below line 70 is the Other Payments and Credits Smart worksheet
  • Please enter the credit in line D.
  • This credit should show up on F1040, line 71.

View solution in original post