Question about: Claim of right repayment over $3,000

[AmyC]

I went through the deduction steps again today using both online and desktop versions and do not have the unemployment showing up. Investigations is done and things should be working for you. There have been lots of software updates. Personally, I am not a fan of the deduction since so many people do not itemize. The credit is generally better but can only be used on the desktop version.  These are the desktop steps- if you repaid more than $3,000:

1. Figure your 2020 tax as normal, without deducting the repaid amount.
2. Locate prior year taxes that are now incorrect. Note the amount of tax liability.
   1. Refigure your tax from the earlier year(s) subtracting the income that you have repaid.
   2. Subtract the difference in tax liability for the year.
   3. The difference is your 2020 credit allowed. This is your right of claim credit. 
   4. This becomes a credit on your return labelled as IRC 1341. This is schedule 3, line 12d.

Use the desktop program, online version does not support this credit. If you are online, easy to switch.   

• If you are online user, and have not purchased your software, simply buy the desktop version and download your .tax file so you don't have to do your taxes again. Any trouble, call support, link below. Here are desktop options.
• If you have paid for your online taxes, call support and tell them the desktop program is required.
• Please use the following link for a customer support number.

Please see example and full details in my other post.- change the dates mentally since the post is older.

@richardggonzo

[arsdean]

This continues to be an issue. I am using the 2021 Dsktop Premier version. I repaid over 3k of wages back. Since I am itemizing a deduction works better for me then a credit. However when I enter the Claim of right repayment over $3,000 in the interview (under other deductions), it falsely shows a negative number (implying repaid amount) under Wages and income -> Unemployment and Paid Family Leave. The amount I repaid is NOT for unemployment repayments or family leave, it's wages being paid back. Is this a bug? How can I address this prior to submitting my returns? What "backend" items or forms would this generate?

[DianeW777]

First please confirm you used the following steps to enter your 'Claim of Right' repayment.  If this is how you entered the amount, you can file your tax return without concern.  Keep in mind this is only allowed because it is more than $3,000 and it is a deduction to income if you can itemize deductions.  You do have an option to claim a credit against your tax instead of trying to use the deduction (it has been referenced in this thread and is posted below for your convenience.

Taking the Income Reduction in TurboTax

1. Login to your TurboTax account or open your tax return.
2. Click on Federal Taxes and then Deductions & Credits.
3. Locate the section Other Deductions and Credits (you may first need to click on show all tax breaks if working online or I’ll choose what I work on if working in the installed desktop version.)
4. Click Start (or Revisit) beside Other Deductible Expenses.
5. A number of questions will appear on the upcoming screens. You are looking for the one that reads Claim of right repayment over $3,000. Click yes when you see this screen. (Be sure to ignore the similar question, repayments of $3,000 or less.)
6. Enter the amount of the repayment in the box Claim of right repayment over $3,000 and click Continue.
7. Once completed your return will show the negative adjustment to your income.

Credit: If you choose to use the credit instead of the income reduction, then you would have to calculate that manually.

• The tax return would have to be completed in the TurboTax Desktop version if the credit is used.  For assistance with this, see: How to switch from online TurboTax to the TurboTax software? and TurboTax Prior Year Products.
  1. ​​​​​​​Figure your tax for 2020 without deducting the repaid amount.
  2. Refigure your tax from the earlier year (the year you originally reported the income) without including in income the amount you repaid in 2021.
  3. Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.
  4. Subtract the answer in (3) from the tax for 2021 figured without the deduction (step 1)

Taking the credit in TurboTax (less common)

There are two components to taking the credit in TurboTax. The first part requires determining the amount of the tax that was overpaid in the year the income was actually received. This requires using the TurboTax Desktop product (or another method) to determine what the tax liability would have been without the income. 

1. The credit can only be applied using the TurboTax Desktop product installed on a computer, in the Forms mode.
2. Switch to Forms mode by clicking on Forms icon in the program.
3. In the list of forms on the left click on 1040/1040RSR Wks above the Form 1040 itself.
4. Scroll down to Other Credits and Payments Smart Worksheet (near the bottom) and enter the amount that you have computed on Line E Claim of Right, IRC 1341 credit for repayments of prior year income.  (Schedule 3 and zoom right to the worksheet and easily entered)

@arsdean 

[Edited: 03/29/2022 | 1:48p PST}

[arsdean]

Thanks Diane, yes I can confirm that I followed the correct steps to enter the right of repayment over 3K (deduction) into turbotax. However the amount still appears erroneously as a negative value under Wages and Income section -> Unemployment -> Unemployment and Paid Family leave. This is obviously incorrect since the amount that I repaid is wages/income that was paid to me in a previous year (and not unemployment benefits). Why is the software categorizing it as such? Seems like a bug? Should I check any forms in the forms view to ensure that there is no bad entries created that miscategorize the amount? Thank you!

[JamesG1]

Are you able to view the claim of right payment on line 33 of Misc Dedns in FORMS?  Or is the payment reflected on Earned Inc Wks?

Please confirm.

In TurboTax Desktop Premier version, I am able to enter a claim of right payment in excess of $3,000 at:

• Federal Taxes / Deductions & Credits / I'll choose what I work on / Other Deductions and Credit / Other Deductible Expenses.
• Click Start / Update to the right.
• At the screen Tell us about your other expenses, report the expense as Claim of right repayment over $3,000.

[arsdean]

I am itemizing so it shows up on Schedule A, line 16 (Other Itemized Deductions section) and the line that it adds is called "Claim Repayments" and has the correct repayment amount next to it. Is this correct?

[LenaH]

Yes. If you are entering your repayment as an itemized deduction, it will appear on Schedule A, Line 16. 

@arsdean

[sansh76]

I am having the same issue. Is that mean I should not worry if my bonus repayment amount shows up in the appears erroneously as a negative value under the Wages and Income section -> Unemployment -> Unemployment and Paid Family leave ?

[richardggonzo]

Hello all,

after several different replies and two direct conversations, I was able to confirm that it’s the user turbo tax  interface that does not reflect the accurate claim of right.    The actual tax schedules show the deduction in my schedule A.  I  went  through my returns with an expert who could see the forms, and confirmed it.   When I actually paid and before I filed , I saw credit  applied properly on my itemized deductions.  

[jsutton314]

Thank you for confirming this! I am going through this same scenario. Sign on bonus repayment. Taxes paid for it in 2021. But, paid back porition of it in 2021. When I use the Turbo Tax (online, not desk top), it shows up as 1099-G on the over view page. Do you know if for 2023, after I pay/submit, will it show up as NOT 1099-G and as the correct line / form. As you can imagine, I do not want to have a 1099-G form!! And I hate not having access to the forms until after I submit. Ugh! 

[AmyC]

You want to go ahead and pay now so that you can see the forms and make any changes. Follow these steps:

1. On the left side, select  Tax Tools
2. Select Print center
3. Select Print, save or preview this year's return
4. If you have not paid, select pay now.

Side note, there are nine states that have the credit including Arizona, Georgia, Kansas, Maine, Massachusetts, Minnesota, Missouri, New York, and Virginia, along with the District of Columbia, have a similar deduction.

Unsure about your 1099-G, be sure you followed the steps in What is a Claim of Right Repayment.

@jsutton314 

[jsutton314]

oh got it! After I pay, I can get access to the forms and still make changes prior to actually submitting? I do not mind paying, just want to make sure I can see the forms and confirm it is correct prior to submitting. Thanks! 

[AmyC]

Yes, you can view your federal and state returns and make sure all is well. Your federal deductions may flow right to your state or it may be a separate entry or not allowed so check your state to my list above.