The DoD sent me a Certificate for Income Tax Adjustment due to a debt repayment back to the government. Where can I enter the amount of debt I paid back to reduce my tax?

[TC411]

In 2021 I reverted from Major to CW2. For several months I was paid as a Major but should have been paid at the lower CW2 rate. The pay variance was paid back throughout 2022.

[MonikaK1]

If you reported the full amount of income you received on your 2021 return, and the amount you had to repay in 2022 was less than $3,000, you can generally report the amount repaid as a negative number in the same income area as the income was reported.

See this TurboTax article on Claim of Right repayments.

A Claim of Right Repayment is a deduction you can take in the current tax year if you’re required to pay back income in excess of $3,000 from a previous tax year that you thought you could keep. You reported and paid taxes on the money, not knowing you’d have to pay it back.

While you still have to repay the money, there are a couple of ways you can get a tax break by reporting the repayment on your current year's tax return:

1. Take a simple deduction of the repaid income from the current year’s income (this is the easiest option for taxpayers who itemize their deductions)
2. Use TurboTax CD/Download to calculate the amount of tax you overpaid and take a refundable credit
   • This is the more valuable option, though it requires a bit more work. More details appear in the article.