Yes, if you made the repayment in 2019, you will have to amend 2019 to get credit for that repayment. The process is cumbersome and, depending on the amount your repaid, you may want to seek assistance from a CPA.
You can either claim a deduction or a credit for this repayment. ("Credits" are usually more beneficial and do not require you to itemize. You will also need a desktop (CD/Download) version of TurboTax).
Repayments
If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. In most cases, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction.
Type of deduction. The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. In most cases, you deduct the repayment on the same form or schedule on which you previously reported it as income. For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040).
Repayment over $3,000. If the amount you repaid was more than $3,000, you can deduct the repayment (as explained earlier under Type of deduction ). However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. If you qualify for this choice, figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.
When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Each instance of repayment is not considered separately.
Method 1. Figure your tax for 2019 claiming a deduction for the repaid amount. If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28.
Method 2. Figure your tax for 2019 claiming a credit for the repaid amount. Follow these steps.
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Figure your tax for 2019 without deducting the repaid amount.
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Refigure your tax from the earlier year (year you received the employer payments) without including in income the amount you repaid in 2019
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Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.
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Subtract the answer in (3) from the tax for 2019 figured without the deduction (step 1).
If method 1 results in less tax, deduct the amount repaid. If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 31.
If you choose a deduction, please enter it here:
Federal taxes - Deductions & credits - I'll choose what I work on - Other deductions and credits - Other deductible expense
Please answer YES to "Did you have any other deductions that are not subject to the 2% limitation?"
Please enter the amount you repaid under, "Claim of Right Repayment (Only if over $3,000).
If you choose a credit (This can only be done in the Forms mode of the Desktop version of TurboTax), please enter it here:
FORMS - F1040 - Below line 30 is the Other Payments and Credits Smart worksheet.
Please enter the credit in line D.
This credit should show up on F1040, line 31.
I've included a link to the IRS website for your reference:
Publication 525 (2020), Taxable and Nontaxable Income
