I had to pay back relocation expenses to my previous company when I switched jobs in 2017. Can I claim this expense on my 2017 tax return?

[RobertB4444]

@rgaglani Yes, you can.  The deduction or credit is claimed on whatever amount the employer requires to be repaid that you claimed as income on the original return.  

[cooltecho]

@RobertB4444 So I had to pay back relocation expenses (WA to TX) $30k to my previous employer in 2021 because of not staying with them for 2 yrs and switching job. That's a huge amount. Is it tax deductible? Can you please let me know how I go about it. I am really stressed.. thanks

[LenaH]

It depends. If the moving expenses paid by your employer were not originally taxed, then you can't take a deduction. If the $30,000 was included in income, then you could use a "claim of right" Section 1341 credit.  It can be claimed as either an itemized (miscellaneous) deduction or as a credit. The deduction is the simpler way to claim your repayment, but a credit might save you more money.

For an explanation of the methods and how to calculate your amounts for the Section 1341 credit, please see Publication 525 and go to page 36. Figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.

To enter as an itemized deduction, please follow the instructions below:

1. Open your return.
2. Click on Federal.
3. Click on Deductions and Credits.
4. Scroll down to Other Deductions and Credits and Click Start next to Other Deductible Expenses.
5. Answer Yes to the question Did you have any of these other expenses?
6. Enter the amount. 

If you decide to claim your repayment of over $3000 as a credit, follow the information in Publication 525. This requires a special computation, and you would need to use a Desktop version of TurboTax and enter your credit using the Forms mode.

@cooltecho

[sansh76]

Hi @LenaH and @RobertB4444  -

      I applied the standard deduction method for Bonus repayment to my employer, following the steps described below. Why does TurboTax show this amount in the following "wages&income section"? This was not repayment to the government .. it was repayment to my employer. Please Advise

Unemployment / paid family leave (1099-G)

How much of your government unemployment did you repay?

If you received benefits in 2020 or earlier, enter the amount you repaid in 2021.

Best,

Sani

[AmyC]

Oh no! The credit is usually better but it is only available on the desktop. The deduction is also available on the desktop version. 

Use the desktop program. If you are online, easy to switch.   

• If you are online user, and have not purchased your software, simply buy the desktop version and download your .tax file so you don't have to do your taxes again. Any trouble, call support, link below. Here are desktop options.
• If you have paid for your online taxes, call support and tell them the desktop program is required.
• Please use the following link for a customer support number.

Applying the credit in the Desktop version

1. Return to the current tax year. (The credit can only be applied using the Forms mode in the TurboTax CD/Download product.)
2. Select the Forms icon.
3. Choose 1040/1040RSR Wks from the list on the left and the worksheet will appear.
4. Scroll down to the Other Credits and Payments Smart Worksheet.
5. Enter the adjusted amount of tax paid.
6. Enter the credit amount you calculated on Line E Claim of Right, IRC 1341 credit for repayments of prior year income.
7. Select the Step-by-Step or Easy Step icon in the upper right corner to return to the interview mode and finish working on your tax return.

References:

How to download TurboTax Desktop software from TurboTax.com

My deduction answer with pictures and guide.

My instructions for how to determine the credit.

@sansh76