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If you had to repay any unemployment compensation (note the method would be similar for repaying any nonbusiness income) in 2023 which you received in 2023, subtract the amount you repaid from the total amount you received and enter the difference on your return. On the dotted line next to your entry, enter "Repaid" and the amount repaid. The TaxAct program does this for you automatically when you enter the information from your Form 1099-G Certain Government Payments for unemployment income.

To enter your unemployment income, go to our Form 1099-G - Entering Unemployment Compensation in TaxAct FAQ.

Repayment under $3000
"For tax years beginning after 2017, you no longer can 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 tax year you repaid it." (Publication 525, Repayments

Repayment over $3,000

If the amount you repaid was more than $3,000, you can take a tax credit for the year of repayment if you included the income under a "claim of right." This means that at the time you included the income, it appeared that you had an unrestricted right to it.

Figure your tax for 2021 claiming a credit for the repaid amount. According to IRS Publication 525 Taxable and Nontaxable Income, on page 35, you should follow these steps:

  1. Figure your tax for the year of repayment without deducting the repaid amount.
  2. Refigure your tax from the earlier year without including in income the amount you repaid in the year of repayment.
  3. Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.
  4. Subtract the answer in (3) from the tax for the year of repayment figured without the deduction (step 1).

To enter the credit into the TaxAct program, go to our Repayment of Income - IRC 1341 Credit FAQ.

The text "IRC 1341" will appear next to Schedule 1 (Form 1040) Additional Income and Adjustments to Income, Line 7 when the return is printed.

An example of this computation can be found in IRS Publication 525, on page 35. Additional information is available in IRS Publication 17 Your Federal Income Tax For Individuals, under the "Repayments" section on page 69.

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

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