If you received unemployment benefits and were issued a Form 1099-G, you'll need to enter the information from the form into your tax return. How you report a repayment depends on whether you repaid the benefits in the same year you received them or in a later tax year.
Enter Your Form 1099-G
To report unemployment compensation shown on Form 1099-G:
- Go to the Federal section.
- Select Income and then My Forms.
- Choose 1099-G (Box 1 Unemployment Compensation).
- Select Add or Edit your Form 1099-G entry.
If You Repaid Unemployment in the Same Tax Year
When you receive unemployment benefits and repay some or all of them during the same tax year, you generally only report the net amount you actually kept.
To enter the repayment:
- Go to the Federal section.
- Select Income and then My Forms.
- Choose 1099-G (Box 1 Unemployment Compensation).
- Enter the amount in Repayment of Unemployment.
The repayment will reduce the unemployment income reported on your return.
If You Repaid Unemployment in a Later Tax Year
The tax treatment is different if you repaid benefits in a year after you originally reported them as income.
Repayment of $3,000 or Less
For tax years after 2017, miscellaneous itemized deductions subject to the 2% adjusted gross income limitation are suspended. As a result, if your unemployment repayment was $3,000 or less, you generally cannot deduct the repayment on your federal return for the year you repaid it.
Repayment Greater Than $3,000
If you repaid more than $3,000 in a later year, you may qualify for relief under the claim-of-right rules.
To enter the repayment in the software:
- Go to the Federal section.
- Select Deductions and then My Forms.
- Open Itemized Deductions.
- Select Miscellaneous Deductions.
- Enter the amount under Repayment Under Claim of Right (Greater Than $3,000).
A Quick Note About Large Repayments
When a repayment exceeds $3,000, taxpayers may be eligible for special tax treatment under Internal Revenue Code Section 1341. Depending on your situation, the IRS rules can be complex, and comparing available options may help ensure you receive the most favorable tax benefit.
Additional Information
For more details about repayments, claim-of-right income, and unemployment compensation, see IRS Publication 525, Taxable and Nontaxable Income.
Understanding when the repayment occurred is the key factor. If the repayment happened in the same year you received the unemployment benefits, simply reduce the income reported. If the repayment occurred in a later year, the amount repaid determines whether any federal tax benefit may be available.