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If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it; OR if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it.

Please refer to IRS Publication 525, on page 34, under the section titled "Repayments" for additional information.

To enter the credit into the TaxAct program:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Miscellaneous Topics in the Federal Quick Q&A Topics menu to expand, then click Credit for repayment (I.R.C. 1341).
  3. Continue with the interview process to enter all of the appropriate information.
  4. On the screen titled Credit for Repayment, enter the I.R.C 1341 credit amount of the credit you figured, then click Continue.

The text "IRC 1341" will appear next to Schedule 3 (Form 1040) Additional Credits and Payments, Line 13 when the return is printed.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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