Recover Taxes Paid on IRS Refund Interest That Was Subsequently Repaid

[BikeHoncho]

I received $189 interest in 2021 from the IRS due to a delay in processing my tax year 2020 refund.  The IRS sent a 1099-INT and I included the $189 as interest income on my tax year 2021 return.  I subsequently filed an amended 2020 return which increased my tax liability, and the IRS required me to repay the $189 interest in August 2022.

Am I able to recover the taxes paid on the $189 on my tax year 2022 return even though the repayment is below the $3,000 Claim of Right limit and I am a taking the standard deduction in 2022?

[rjs · Accepted solution]

Under the tax law that was passed in 2017, for years 2018 through 2025 there is no deduction, credit, or any kind of tax adjustment for a repayment of $3,000 or less. So there is no way for you to recover the tax that you paid on the $189 of interest.