Unemployment Overpayment

Forum|Forum|5 years ago
February 19, 2021
1 reply
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I have been informed that I was overpaid unemployment in 2020. When I filed I told them to take out 10% for taxes. They want me now to pay back the overpayment but how does this work when I've already paid taxes on it. Say I overpaid $2,000 and paid $200 in taxes. Do I only pay back $1,800? If I pay back the full $2,000 how do I get back the $200 I already paid in taxes against that amount?

MinhT1

Level 15

The taxes withheld in 2020 are reported in box 4 of your form 1099-G and are entered on your 2020 tax return and you will get the full credit of the taxes withheld in 2020.

When you repay the overpayment, you'll have to repay the gross amount (in your example $2,000). You can only claim this repayment only in the year you actually repay the amount.

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smsprauerAuthor

Level 2

So in 2021 when I do my 2020 taxes the repayment will look like a -$2000 on my income thus reducing my AGI. So I'll get back what I've already paid in taxes to that overpayment. Does that sound right? I thank you.

LenaH

Community Manager

No. Since your unemployment compensation repayment will be less than $3,000 and you are repaying it in a subsequent year, there is no tax benefit available.

Per IRS Publication 525, if you repay unemployment compensation that was included in income in an earlier year, you can deduct the amount repaid on Schedule A, as long as you itemize and the repayment amount is over $3,000.

For more information, please see IRS Publication 525 and go to page 27.

@smsprauer

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