Amounts repaid in the same year can be netted with compensation received. Otherwise, a tax benefit is available only if a future year repayment is more than $3,000.
If you repay 2020 unemployment benefits in 2021 or any future year, and the repaid amount is $3,000 or less, there is no tax benefit available.
If the amount you repay in a subsequent year is more than $3,000 you will have two options available for your 2021 tax return:
- Option 1. Claim a miscellaneous itemized deduction for the amount repaid. Note that the deduction is not subject to the 2% of AGI limitation.
- Option 2. Claim a refundable credit. The credit is calculated by refiguring her 2020 taxes as if the excess unemployment compensation had not been received. The credit is the difference between the recalculated taxes and the taxes originally paid. It is reported on Schedule 3, line 13.
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