Schedule 5 for claim of right for an amount greater than $3000

[Opus 17]

Click "forms" icon at the top to change to Forms mode.  Use the menu to go to Schedule 5 (if you don't already have a schedule 5, this will create one).  On line 74 click box d and enter the amount and "IRC 1341" in the space next to the number.  Or, there may be a "schedule 5 smart worksheet" that will open when you double click line 74, enter the info there and it will flow to the main schedule 5.

[caitlinannredmond]

I am in Forms mode but cannot  manually open schedule 5.  When selecting the "open forms" on the menu, it does not list schedule 5.

[DoninGA]

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@caitlinannredmond wrote:

I am in Forms mode but cannot  manually open schedule 5.  When selecting the "open forms" on the menu, it does not list schedule 5.

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IRC 1341 Claim of Right for tax year 2019 is entered on Schedule 3 Part II Line 13d. 

Enter the amount on the Form 1040/1040SR Worksheet Schedule 3 on the Other Credits and Payments Smart Worksheet Line D.  This amount will flow to Schedule 3 and then to Form 1040 Line 18d. 

[caitlinannredmond]

I want to enter the amount as a credit, not a deduction, since the IRS allows either method.   Using your posted instructions to enter "other deductions and credits" allows me to enter a credit only if one of these two options exits: 1) allocation of individual income tax to the US Virgin Islands or 2) credit for holding certain tax credit bonds.  

IRC1341

then the tax imposed by this chapter for the taxable year shall be the lesser of the following:

(4)

the tax for the taxable year computed with such deduction; or

(5)an amount equal to—

(A)

the tax for the taxable year computed without such deduction, minus

(B)

the decrease in tax under this chapter (or the corresponding provisions of prior revenue laws) for the prior taxable year (or years) which would result solely from the exclusion of such item (or portion thereof) from gross income for such prior taxable year (or years).

[DoninGA]

How to calculate IRC 1341 Claim of Right credit - IRS Publication 525 page - https://www.irs.gov/pub/irs-pdf/p525.pdf#page=35

Method 2. Figure your tax for the year of
repayment claiming a credit for the repaid
amount. Follow these steps.
1. Figure your tax for the year of repayment
without deducting the repaid amount.
2. Refigure your tax from the earlier year
without including in income the amount
you repaid in the year of repayment.
3. Subtract the tax in (2) from the tax shown
on your return for the earlier year. This is
the credit.
4. Subtract the answer in (3) from the tax for
the year of repayment figured without the
deduction (step 1).

[RobertG]

Yes, if you reported this income in prior years, you can claim repayments of over $3,000 on your tax return. You can deduct this kind of repayment under Internal Revenue Code section 1341 as a 'Claim of Right'. 

Deducting a repayment is covered in IRS publication 525 on page 34.  

If the amount you repaid was more than $3,000, you can deduct the repayment as an 'other itemized deduction' on Schedule A (Form 1040), line 16. You can also choose to take a tax credit for the year of repayment. Figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.

The way to figure these amounts is shown in Publication 525.

To claim the credit you will need to use a TurboTax desktop edition, so you can enter it in 'Forms Mode'.

In the Forms mode, click on Schedule 3 line 12, and it will take you to the  'Other credits and payments smart worksheet'.  Here is where you enter your 'Claim of Right, IRC 1341 credit for repayments of prior year income'.

[ahaik]

For 2019 Tax Year, go to 1040/1040SR Worksheet in Forms Mode. Go to Page 6, Other Credits and Payments Smart Worksheet. Put amount in D, Claim of Right IRC 1341, credit for repayments of prior year income. This will populate Line 13 D on Schedule 3.