cancel
Showing results for 
Search instead for 
Did you mean: 
New Member

Entry of a repaid amount to my employer for a relocation expense that I was previously paid. Thanks. Vince

I was paid for a relocation, and agreed to a 2 year extension for the move. I retired 2 months early and had to repay part of the $. how or where do I enter the repaid amount?
4 Replies
New Member

Entry of a repaid amount to my employer for a relocation expense that I was previously paid. Thanks. Vince

Was the amount your employer paid (for) you reported on your Form W-2?  If the reimbursement by your employer (or payment of moving expense by them) was not reported as income, then you cannot deduct the repayment you made.

If it was reported at income, how you treat the repayment will depend on the amount you repaid.

As far as the repayment of your relocation expense goes:

The Claim of Right allows you to take a deduction (or credit) for repayment of income that was taxable in a prior year.  If you don’t itemize, that won't be helpful to you!

IF you pay back less than $3000, the repayments are deductible on Schedule A (subject to the limitation of 2% of your Adjusted Gross Income.)

To report the repayment:

  • Log into your return
  • Click on Federal Taxes
  • Click on Deductions and Credits
  • Scroll to Other Deductions and Credits. 
  • If needed, click on the Show more button.
  • Click the button next to Other Deductible Expenses
  • The first screen after this does not apply to you for this question.
  • On the next screen, you will be asked if you have any of the less common expenses.  (One of the expenses listed is the repayment of $3000 or less.
  • On the following screen, you can enter a description and amount.

If you paid more than $3000 and prefer to take a deduction on your Schedule A:

  • The next screen after the instructions above asks if you had Right of Repayment MORE than $3000.
  • Click yes, and then enter the amount you repaid.
  • IF you pay back more than $3000, you have the option of taking a tax credit in 2016 (the year of the repayment). 

To calculate and claim the credit you would need to use TurboTax CD/Download, because the amount has to be entered in Line 73, box d of your Form 1040.  Per IRS instructions from the Pub 17:

"If you are claiming a credit for repayment
of amounts you included in your
income in an earlier year because it appeared
you had a right to the income, include
the credit on line 73. Check box d
and enter “I.R.C. 1341” in the space
next to that box. See Pub. 525 for details
about this credit."    
Click on this link:
https://www.irs.gov/pub/irs-pdf/p525.pdf    
Go to page 34 and start reading at repayments.  It seems that you have to recalculate what your tax would have been if the income you repaid wasn't included when you originally filed.  Then take the difference between 1) the taxes you actually paid with the income included and 2) the taxes you would have paid if the income hadn't included the repayment amount.  
Enter the difference as a credit on Line 73, check box d and indicate I.R.C. 1341.


Level 2

Entry of a repaid amount to my employer for a relocation expense that I was previously paid. Thanks. Vince

@vmistico  did you ever figure this out? according to this article, relo payback is not tax deductible... did you have any luck with this?

 

https://www.worldwideerc.org/article/repayments-under-us-payback-agreements-no-longer-deductible/

Level 15

Entry of a repaid amount to my employer for a relocation expense that I was previously paid. Thanks. Vince

Starting in 2018,  Schedule A deductions ,subject to the limitation of 2% of your Adjusted Gross Income, are no longer allowed. 

IF you pay back less than $3000, the repayments are  not deductible

Highlighted
Level 2

Entry of a repaid amount to my employer for a relocation expense that I was previously paid. Thanks. Vince

@Hal_Al thanks for your clarification. in this case, the only option remaining is to take the credit since  i am paying back more than $3000. Can you help clarify if this is still doable since it is specifically a repayment for "relocation"?

 

this article seems to think not:

https://www.worldwideerc.org/article/repayments-under-us-payback-agreements-no-longer-deductible/