Where do I deduct income returned to my former employer?

[buonocs285]

It was in the amount of $3,800.

[AmyT · Accepted solution]

Since the amount you repaid was more than $3,000, there are two possible ways of doing the calculation. 

Method 1 is to take a deduction, which is the simplest method but may not get you the full benefit.

To calculate the repayment as a deduction, (Method 1):

• Federal taxes - Deductions & Credits - Check for More Tax Breaks - Other Deductions & Credits - Show more - Other Deductible Expenses
• When you get to the screen that shows Less Common Expenses, click No
• The next screen will have Any Other Deductions? at the top.  Please answer YES to "Did you have any other deductions that are not subject to the 2% limitation?"
• Please enter the amount you repaid under, "Claim of Right Repayment (Only if over $3,000).

To explore the more complex route of calculating the credit (Method 2), please refer to IRS Publication 525 (https://www.irs.gov/pub/irs-pdf/p525.pdf)

NOTE: If you choose to follow the more complex route and use the credit:

• You will need to use the Desktop version of TurboTax (available here: https://turbotax.intuit.com/personal-taxes/cd-download/)
• The amount of the credit can only be entered in the Forms mode
• Any entries made directly into forms will waive the Accuracy Calculations Guarantee (https://turbotax.intuit.com/corp/guarantees.jsp)