Since you repaid the taxable amounts in 2017, the amounts repaid are entered as an itemized deduction on Schedule A or as a tax credit on Form 1040 Line 73d as a Claim of Right IRC 1341, depending on the amount repaid.
To report the repayment of taxable income as an itemized deduction on Schedule A -
- Click on Federal Taxes (Personal using Home and Business)
- Click on Deductions and Credits
- Click on I'll choose what I work on
- Scroll down to Other Deductions and Credits
- On Other Deductible Expenses, click on the start or update button
Or enter other deductions in the Search box located in the upper right of the program screen. Click on Jump to other deductions
On the next screen, click on No (Generation Skipping Taxes)
(If the repayment was $3,000 or less) On the next screen, click on Yes (Less Common Expenses) and enter a description and the amount repaid on the following screen. Continue with this section until it completes.
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(If the repayment was greater then $3,000) On the next screen, click on No (Less Common Expenses)
On the next screen, click on Yes (Any Other Deductions)
On the next screen, enter the amount repaid in the box for Claim of Right repayment. Continue with this section until it completes.
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If your repayment is greater then $3,000, instead of entering the amount repaid as an itemized deduction on Schedule A, you can enter a Claim of Right tax credit on Form 1040 Line 73d, You will need to determine which method of reporting the repayment gives you the greater benefit.
This tax credit can only be entered directly on Form 1040, so you have to use the 2017 desktop editions as the online editions do not have the capability to enter tax data directly on a form, schedule or worksheet. Using the desktop editions in Forms mode to access Form 1040 Line 73d and enter the tax credit in the Other Credits and Payments Smart Worksheet line D.
To figure the Claim of Right tax credit, use Method 2 in IRS Publication 525 Taxable and Nontaxable Income. page 34 - https://www.irs.gov/pub/irs-pdf/p525.pdf#page=34
