Should you receive a tax credit if you paid taxes in 2017 on Unemployment benefits, that you ended up having to reimburse in 2018?

midgeweld — Sat, 01 Jun 2019 20:08:36 GMT

I entered the reimbursement as listed on my 1099G, however it did not reduce my tax bill at all. In my mind if I paid taxes on income that I essentially didn't make, then I should get those taxes paid returned to me when filing my taxes the following year?

Yes, if the repayment was $3000 or more. But the credit i...

Hal_Al — Sat, 01 Jun 2019 20:08:37 GMT

Yes, if the repayment was $3000 or more. But the credit is a non-refundable credit. It can only be used to reduce you tax liability. None of it will be sent to you as a refund.

This situation is described in IRS Publication 525. pgs 34-35. You can take a misc itemized deduction, on line 16 of schedule A (not subject to the 2% of AGI threshold) Or you can take a credit. The credit is computed by refiguring the tax return from the previous year as if the income had not been received. Then the difference in tax is claimed as a credit on the current year's return. In the forms mode (the forms mode is not available in the on-line versions of TurboTax[TT]), you can use the line 74 smart work sheet to enter the credit amount on line 74; select item D, claim of right under IRC 1341 for repayments. TT will enter "I.R.C.1341" on the line next to box d on line 74 of form 1040 (schedule 5). TT does not do the calculation or compare it to the alternate deduction.

So, the taxpayer has the option of either claiming the credit or deducting the repayment as a miscellaneous itemized deduction, whichever provides the greater benefit. But, you cannot file an amended prior year return.

If the amount is $3,000 or less, only the miscellaneous itemized deduction, subject to the 2% of AGI threshold, was allowed in the past . All miscellaneous itemized deduction, subject to the 2% of AGI rule go away in 2018. I've seen nothing yet to indicate if there will be an exception for repayments of income

https://www.irs.gov/pub/irs-pdf/p525.pdf

topic Should you receive a tax credit if you paid taxes in 2017 on Unemployment benefits, that you ended up having to reimburse in 2018? in After you file

Should you receive a tax credit if you paid taxes in 2017 on Unemployment benefits, that you ended up having to reimburse in 2018?

Yes, if the repayment was $3000 or more. But the credit i...