Under current tax law, there is no federal tax deduction for repaying $3,000 or less of unemployment benefits from a prior year. Thus, you do not enter this 1099-G for your federal return (it won't change your tax outcome).
Some states may allow a deduction, so you may want to enter it in the State section (if prompted by the program).
If you repaid more than $3,000, you are eligible for a "Claim of Right" credit or deduction under IRS Section 1341. Do not enter this in the 1099-G/Unemployment section (which is for income).
- Open or continue your return.
- Under Deductions & Credits, Scroll down to Other Deductions and Credits, and Click on Show More.
- Click on Start/Revisit next to Other Deductible Expenses.
- Answer No to questions about less common expenses until you see the screen "Did you have any of these other expenses?", and Click on Claim of Right Repayment (over $3,000).
- Enter the amount from Box 2 of your 1099-G there.
Note: some state unemployment agencies use Box 2 to report "Adjustments" or "Repayments."
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