Jim there is a whole section on this on page 3-26 of the federal tax book deluxe edition. It looks like it depends on whether the amount is $3,000 or less or greater than 3,000. Looks like if it is $3,000 or less and the income was previously reported as wages then no deduction is allowed. If more than $3,000 it states to claim a deduction on line 16 of schedule A or to claim a credit that apparently goes to line 13B schedule 3. I cannot recall having this before so you should read the whole section to make sure.