How do I apply a Claim of Rights under $3000 in TurboTax Online?

[NealBell]

In early 2025 I had to replay part a long term disability claim in the order of around $2800 due to me returning to work in November of 2024, resulting in an overpayment from that month.  This being under the $3000 limit to claim a deduction, it seems that I need to do some work based on my 2024 taxes.  How can I do this with TurboTax online?  My 2024 taxes were done using this product.

[LindaS5247]

Because you repaid the long-term disability overpayment in early 2025, this repayment can be claimed on your 2025 tax return. Repayments of benefits are generally deducted in the year that they are paid.

The amount that you repaid is under the $3,000 threshold. That means you can not use the Claim of Right credit or deduction method. Depending on how it was handled by the insurance company, you may have received a 2025 tax form that reduces your taxable income for 2025 by the amount repaid.

 If this did not happen, you can report it in TurboTax as follows:

1. Click on Federal and then Deductions & Credits.
2. Go to Other Deductions and Credits. You may have to go to Deductions & Credits Summary and scroll down to find it.
3. Click on Start or Revisit next to Other Deductible Expenses
4. Your screen will say Did you pay any generation-skipping taxes in 2025?, Select No
5. Your next screen will say Did you have any of these less common expenses? The last item listed is Repayments of $3,000 or less (previously included in income), answer; Yes
6. Your screen will say Tell us about your less common expenses, you can type something like Repaid disability income reported in 2024 and the amount $2,800
7. Continue through your TurboTax screens and answer any follow-up questions to complete your entry

Make sure to keep any records for your $2,800 repayment for documentation for your 2025 tax return. 
 

Please return to Community if you have any additional information or questions and we would be happy to help.

[bbyschnook]

So I did as you indicated for a repayment of under $3000 and it didn't affect my income.  Must you itemize to be able for that repayment to come off your income.  My situation was very unique, and it caused a loss in federal refund and owing state.  This wasn't my fault it was the inurance companies and they refuse to re-issue a corrected W-2 or provide any tax document besides a letter stating the repayment amount.  

[DaveF1006]

Yes, it was considered a miscellaneous itemized deduction, but no longer. The Tax Cuts and Jobs Act (passed in 2017) suspended most miscellaneous itemized deductions through the end of 2025. 

Even if you do itemize, the specific category for "repayments of $3,000 or less" is currently non-deductible at the federal level because of that 2017 law. It’s essentially a "lost" deduction for federal purposes. 

[bbyschnook]

So as I understand the below from Indiana Dept of Revenue, that I can claim the repayment on my Indiana State taxes even though I couldn't claim it on my Federal as I didn't have enough to itemize.

Repayment of Previously Taxed Income Deduction  630
You may be eligible to claim a deduction for the repayment of
previously taxed income, also known as “claim of right,” if:
• You reported the income to Indiana in a previous year,
• You repaid some or all of it this year, and
• For federal tax purposes, you are eligible to:
ο claim the repayment as an itemized deduction, or
ο claim a credit based on the repayment amount.
Example 1. Ryan was a full-year Indiana resident in 2024, and received
$1,700 unemployment compensation that year. He reported the full
amount on his 2024 federal and Indiana income tax returns. In March
of 2025 Ryan found out he had to repay $345 of that compensation; he
repaid it that summer. For 2025 federal tax purposes he is eligible to
claim an itemized deduction* based on the $345 amount repaid. Ryan
is eligible to claim the $345 amount as a repayment of previously taxed
income as a deduction on his 2025 state tax return.
*In this example, Ryan is not required to claim itemized deductions
when figuring his federal taxable income for 2025; he cannot claim
miscellaneous itemized deductions for federal purposes. Regardless,
he is still eligible to claim the deduction on his state tax return.

[JamesG1]

See in TurboTax, in the Indiana state income tax return, at the screen Here's the income that Indiana handles differently.

Select Repayment of Previously Taxed Income Deduction.

The deduction may be found on Schedule 2 Deductions on line L.

[bbyschnook]

That is where I entered it but the Turbo tax explanation is vague and I looked it up with Indiana and included there explanation above, just want to make sure I am reading it write that I can claim it without itemizing my deductions in Federal and taking the standard deduction

[DawnC]

That is where it goes and depending on the amount, you should be able to claim it.     See IN - Repayment of Previously Taxed Deduction  -  This link has an example if it helps!

Who is Eligible?  Anyone who has:

• Reported income to Indiana in a previous year
• Repaid some or all of it this year
• For federal tax purposes, is eligible to claim the repayment as an itemized deduction or claim a credit based on the repayment amount
• @bbyschnook