Repayment of Overpaid Unemployment Benefits

[mwloomis]

How would I report either as a credit or misc. deduction the repayment of overpaid unemployment benefits in Lacerte? It is over $3,000.

https://ttlc.intuit.com/community/taxes/discussion/do-i-get-any-tax-credit-for-repaying-unemployment...

[George4Tacks]

Deduction goes on Schedule A, just like in TT

Credit goes in Screen 38 > Other Credits > Credit for repayments

Credit for Repayments (IRC 1341)

Other Credits

Screen 38; Code 54

If the taxpayer had to repay an amount included in income in an earlier year, enter the amount that qualifies as a payment. The program includes this amount on Form 1040, Schedule 3 and prints "IRC 1341" on a supporting statement.

[Mag_a_rita · Accepted solution]

On screen 38.2>Other credits>Credit for repayment (IRC 1341)

Input here will flow to the 1040, schedule 3 with an "IRC 1341" supporting statement.

[johnstax]

What if repayment was done in the same year and the company is not amending their reporting return or correcting the w-2s?

[qbteachmt]

"What if repayment was done in the same year and the company is not amending their reporting return or correcting the w-2s?"

Unemployment is not reported on W2.

A repayment to an employer is something other than Unemployment. Unemployment is a governmental program.

@johnstax 

Perhaps you should start your own topic and give more details.

[johnstax]

I understand that. My original question was about Supplemental Unemployment Benefits (SUB pay) being repaid to an employer who included the original payment of (SUB) as taxable income on a W-2 for 2020. Subsequent repayment was taken out of employees' paycheck IN THE SAME YEAR (2020). Employer will not correct W-2 but instead sent a letter explaining to employee that they should deduct the repayment on their tax return (1040).

[qbteachmt]

This is why it's not the same as this UI topic: "My original question was about Supplemental Unemployment Benefits (SUB pay) being repaid to an employer who included the original payment of (SUB) as taxable income on a W-2 for 2020."

A SUB is an employer-sponsored plan, and some States require submission and approval, and the employer might have a 501(c)(17) trust for this.

https://www.irs.gov/charities-non-profits/other-non-profits/supplemental-unemployment-benefits-trust...

As far as "taxable income:" A SUB payment is not typically subject to FICA, but is subject to income taxes. That's what makes a SUB different than Severance pay, too. And it should not impact UI eligibility.

The IRS has resources for all of this.

https://www.irs.gov/pub/irs-pdf/p525.pdf

"Supplemental unemployment benefits.Benefits received from an employer-financed fund (to which the employees didn't contribute) aren't unemployment compensation. They're taxable as wages and are subject to withholding for income tax. They may be subject to social security and Medicare taxes. For more information, see Supplemental Unemployment Benefits in section 5 of Pub. 15-A. Report these payments on line 1 of Form 1040 or 1040-SR.

And:

"Repaid wages subject to social security and Medicare taxes.

If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. File a claim for refund using Form 843."