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Level 1

How do I get a deduction or credit for wages I repaid to my employer?

 
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Employee Tax Expert

How do I get a deduction or credit for wages I repaid to my employer?

If you repaid wages that you reported on your tax return in a prior year, you can either take a deduction or a credit for the repayment. This is known as a Claim of Right repayment.

If the amount that you repaid is $3000 or less, you can claim a miscellaneous job expense for wages you repaid.

If the amount is greater than $3000, you have the option of taking a credit for the repayment or taking a deduction.

You would report your repayment of $3000 or less this way:

  1. Go to the Federal Taxes tab
  2. Select Deductions and Credits
  3. Click on I'll choose what I work on
  4. You will arrive at thYour 2014 Deductions & Credits screen
  5. Scroll down until you locate the Other Deductions and Credits section 
  6. Continue to the screen Less Common Expenses (see screenshot). Say "yes, and enter your expense."

If the expense was greater than $3000, follow the same steps, but say "no" under Less Common Expenses, and "yes" to Any Other Deductions? 

On the screen Report Other Deductions, you will see a place to report your Claim of Right repayment.

If you choose to take a credit rather than a deduction, you will need to use the CD/Download version of TurboTax, and use Forms Mode to  enter it on your return.This is how to compute it:

Figure your tax for 2013 claiming a credit for the repaid amount. Follow these steps.

  1. Figure your tax for 2015 without deducting the repaid amount.

  2. Refigure your tax from the earlier year without including in income the amount you repaid in 2015.

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

See this answer for more information, including directions for claiming the repayment as a credit.
https://ttlc.intuit.com/replies/3730815


Level 7

How do I get a deduction or credit for wages I repaid to my employer?

@IsabellaG  thanks for this thorough answer. can you confirm that taking a deduction is still allowed in 2019? I heard the tax cuts and jobs act eliminated the miscellaneous itemized deduction on Schedule A  line 28, meaning we can no longer use this method...

Level 20

How do I get a deduction or credit for wages I repaid to my employer?

The Sch A deduction is still  allowed  ... see the instructions for line 16 :   https://www.irs.gov/pub/irs-pdf/i1040sca.pdf