Entering a Claim of Right Repayment over $3,000 continues to automatically generate an "Unempolyment and paid family leave" 1099 under income and expenses. Software Bug?

[mmmed]

This bug needs to be fixed so I can file

[Mike9241]

you are no longer allowed to deduct a claim of right repayment.  since it's over $3,000 you must go back to the year you got the money. then compute your taxes assuming you never got it. the decrease in tax is claimed as a credit on schedule 3 line 13.  label it as "claim of right IRC 1341"

[mmmed]

Thank you for the update.

How can I fill out the schedule 3 in turbotax online? I am using the TT self employed product.

Best,

M

[Opus 17 · Accepted solution]

Sorry, the previous answer is incorrect. The claim of right repayment is a special itemized deduction not subject to the 2% rule, and it was not eliminated by the tax reform act of 2018 even though most other miscellaneous deductions were eliminated.

You do still have the option of taking the section 1341 credit if it gives you a better recovery than the deduction, but the deduction is not eliminated.

This bug has been reported. We don’t know when it will be fixed. However, the IRS will not open e-filing until January 27 at the earliest, so even if TurboTax would allow you to file earlier, your return will only go into cold storage.  There are a lot of tax law changes and a lot of forms that aren’t ready to file yet. Don’t be in a rush this year.

[Janie7]

Still need an answer to this, taxes are due next week and I need to enter a Section 1341 (I.R.C. 1341) Claim of Right credit. Need to do this with turbotax online, not the desktop version.

[Opus 17]

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@Janie7 wrote:

Still need an answer to this, taxes are due next week and I need to enter a Section 1341 (I.R.C. 1341) Claim of Right credit. Need to do this with turbotax online, not the desktop version.

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You can't take the IRC 1341 claim of right credit using the online version.  It requires making a manual entry in the desktop version.

You can take a schedule A itemized deduction for the repayment.  This is in Other Uncommon Deductions section, there is a question about generation skipping tax (no), repayments under $3000 (no), then the question about repayments over $3000 will come up.  Depending on your tax situation, the deduction might give the same (or sometimes better) result than the credit.

To take the credit, you must calculate the credit amount yourself.  Then, enter the credit on the form 1040/1040SR worksheet using the instructions (with pictures) from this post.

https://ttlc.intuit.com/community/taxes/discussion/claim-of-right-with-standard-deduction/00/1051930

[DawnC]

File an extension if you don't believe you will be able to file and pay before 05/17.      @Janie7

The deduction can be found in the Other Credits and Deductions section, the next to last line item is Other Deductible Expenses.   To take the credit, as Opus17 states above, you will need to use the Desktop software to manually add the credit.   If you would like to switch platforms, please see How do I switch from TurboTax Online to TurboTax CD/Download?

[austhokie]

this error of generating a unemployment/1099 from a right to claim deduction is still existing

I just completed mine - had a repayment of 4800 this year for an overpayment in 2021 and its showing as unemployment now on my federal deduction.  it's then also triggering a 1095A request when I have employer provided healthcare

i'm getting notifications that turbotax is accepting efiles - and I want to get this taken care of - if I delete the employment info then it deletes the deduction

[socalbonzi]

this bug still exists. I enter the deduction, and it autopopulates the unemployment repayment benefit.  when I delete the repayment benefit, then the deduction goes away, and the cycle continues.