Benefits repayment

[Karen B27]

I received unemployment benefits for 4 months in 2020 and was found to have been over payed by $2000 due to severance payment. I am now repaying that amount back in 2021. Where do I claim this repayment? Can I add to my 2021 tax return since the payments were made in 2021 or do I need to revise my 2020 tax return?

[OpeA1]

Hello Karen B27:

Any repayment should go in as taxes. Therefore, You can make this repayment as estimated taxes now in 2021. You can make the adjustment on your 2021 tax return because the estimated taxes you pay now, will reflect on your 2021 tax return. 

I hope this is helpful!

[Karen B27]

However, these were unemployment benefits paid to me with taxes removed. Just curious why they would be showing as taxes vs. repayment of income? 

[conniem123]

Hello Karen B27

I understand in 2021 you are repaying unemployment compensation benefits you received in 2020.  I also understand you did correctly include the data from your 2020 Form 1099G on your 2020 tax return.

Unfortunately, since the amount you are repaying is less than $3,000, you aren’t able to deduct it from your income in the year you repaid it, 2021.

If the amount of repayment in 2021 is $3,000 or more, you may be able to deduct if you itemize and file Schedule A.

https://www.irs.gov/pub/irs-pdf/p525.pdf, refer to page 36, middle paragraph.

I hope you find this helpful!