How to enter repayment of overpaid wages - PFL

[Brit6]

Last year husband was overpaid just over $400 of paid family leave.  We repaid the amount at the beginning of this year.  The company won't send a corrected W2 but has sent a Tax Credit letter.  Not sure how to enter this repayment.  We can't claim it as a deduction as it's less than $3000 but it looks like we could enter it as -ve income.  Is that correct?  Also seems we would need to contact the employer for refund of taxes paid.  Would that be correct also or would that be double dipping?

Thanks.

[LenaH]

If you made a repayment in 2021, you cannot adjust your 2020 return as it is two separate tax years. Unfortunately, there is no tax benefit available for repayments less than $3,000 made in a subsequent year. 

For more information, please see IRS Publication 525 and go to page 35. 

[Brit6]

Thanks for your response.  I read the publication you referred me to and from what I'm understanding it looks like we would be able to deduct it next year.  Is that correct?

[AmyC]

The deduction is not currently allowed again until 2025. Only the repayments over $3,000 and the credit are currently usable.

If you look at page 35 again, you will see a caution and:

For tax years beginning after 2017, you can no longer claim any miscellaneous itemized deductions; so, if the amount repaid was $3,000 or less, you aren’t able to deduct it from your income in the year you repaid it.

You do want to get a refund of the taxes paid.