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pds2580
Level 1

I received unemployment in 2021 later got letter of overpaid benfits by $3,800 I paid it back this year 2022. So original yearly income 2021 was less. anything I can do?

so my income for 2021 was 3,800 less then was reported for 2121 due to the unemployment overpayment that I just payed back in 2022 of this year.
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Accepted Solutions
Mike9241
Level 15

I received unemployment in 2021 later got letter of overpaid benfits by $3,800 I paid it back this year 2022. So original yearly income 2021 was less. anything I can do?

you can not amend 2021 because the amount was not paid back until 2022.

you have two options in 2022

since the repayment was more than $3,000 you
1) can take as a deduction on schedule A line 16 denote as IRC 1341 repayment OR
2) recompute the taxes in the year (2021) you received the overpayment by excluding the amount repaid from income.
the decrease in taxes is taken as a credit on schedule 3 line 12d denote as IRC 1341

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6 Replies
Bsch4477
Level 15

I received unemployment in 2021 later got letter of overpaid benfits by $3,800 I paid it back this year 2022. So original yearly income 2021 was less. anything I can do?

If you reported it previously as unemployment compensation, you may be able to deduct it as an other itemized deduction since the amount repaid is over $3,000.

pds2580
Level 1

I received unemployment in 2021 later got letter of overpaid benfits by $3,800 I paid it back this year 2022. So original yearly income 2021 was less. anything I can do?

How would I go about initiating that. What I have to do it on the 2021 taxes or just have to wait and do it on 2022. What does all that entail thanks

pds2580
Level 1

I received unemployment in 2021 later got letter of overpaid benfits by $3,800 I paid it back this year 2022. So original yearly income 2021 was less. anything I can do?

How would I go about initiating that. What I have to do it on the 2021 taxes or just have to wait and do it on 2022. What does all that entail thanksb

Mike9241
Level 15

I received unemployment in 2021 later got letter of overpaid benfits by $3,800 I paid it back this year 2022. So original yearly income 2021 was less. anything I can do?

you can not amend 2021 because the amount was not paid back until 2022.

you have two options in 2022

since the repayment was more than $3,000 you
1) can take as a deduction on schedule A line 16 denote as IRC 1341 repayment OR
2) recompute the taxes in the year (2021) you received the overpayment by excluding the amount repaid from income.
the decrease in taxes is taken as a credit on schedule 3 line 12d denote as IRC 1341

pds2580
Level 1

I received unemployment in 2021 later got letter of overpaid benfits by $3,800 I paid it back this year 2022. So original yearly income 2021 was less. anything I can do?

thank you for your help

Critter-3
Level 15

I received unemployment in 2021 later got letter of overpaid benfits by $3,800 I paid it back this year 2022. So original yearly income 2021 was less. anything I can do?

Actually on the 2022 return you will only have ONE option (the right of claim)  unless congress changes the tax laws before then  and that is option 1 ... 

 

Repayment over $3,000.   If the amount you repaid was more than $3,000, you can recover the tax you originally paid using one of two methods. You can do it as a deduction on schedule A or a tax credit on line 73 of the 1040 form if when you included the income in a previous year, it appeared that you had an unrestricted right to it.

Figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.

Method 1.   Claiming a deduction for the repaid amount. You deduct it as a miscellaneous itemized deduction on Schedule A  line 28.

This is the flow in TurboTax: 
Federal taxes > Deductions & credits > I'll choose what I work on > Other deductions and credits > Other deductible expense>Go thru to third screen> answer YES to "Did you have any other deductions that are not subject to the 2% limitation?"
Enter the amount you repaid under, "Claim of Right Repayment (Only if over $3,000).

Method 2.   Figure your tax claiming a credit for the repaid amount. Follow these steps.

1.      Figure your tax without deducting the repaid amount.

2.      Refigure your tax from the earlier year without including the income that you had to be repaid.

3.      Subtract the tax calculated in (2) from the tax shown on your return for the earlier year. This is the credit.

 This is the flow in TurboTax (This can only be done in the Forms mode of the Desktop version of TurboTax)

Go to FORMS (top right of main screen) > Form 1040 > Scroll below line 72 to "Other Payments and Credits Smart worksheet"
Please enter the credit on line D. 
This credit should show up on Form 1040 line 73
I've included a link to the IRS website for your reference:
https://www.irs.gov/pub/irs-pdf/p525.pdf 

 

 

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