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posted Sep 9, 2021 10:45:19 AM

Overpayment

Hi, I'm not sure if you can answer this question but I have been paying the state for an overpayment on unemployment.  Am I able to somehow claim the interest paid?  Any info on this subject would be helpful.  Thank you.

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2 Replies
Employee Tax Expert
Sep 9, 2021 12:42:19 PM

Hi @harryhawk999 

 

When you repay unemployment benefits in the year after you received them, you may be eligible for a deduction or credit on your taxes for the current year (in this case, your 2021 taxes). 

 

When you are preparing your taxes next year with TurboTax, in the Wages and Income section start the process of reporting Unemployment Income, but indicate that you didn't receive any benefits on a 1099-G or otherwise (unless you did, of course!). You will also be asked if you repaid any benefits from a prior year. When you enter them, TurboTax will calculate the credit or deduction for you! 

Expert Alumni
Sep 9, 2021 12:42:40 PM

Hi harryhawk999!

Great question! Unfortunately, interest paid on an overpayment of income is not a deductible item on the federal or state tax return. Please let me know if you have any more questions.  Thanks! Akil C.