How do you account for an insurance payment that comes a year after a casualty loss was declared?

[gfpstaxes]

TP declared a casualty loss in 2021. She included her insurance payments. Then in January 2022 she received one extra insurance payment. How do I account for that in 2022?

[BobKamman · Accepted solution]

You look at Pub 547

Actual reimbursement more than expected. 

If you later receive a larger reimbursement amount than you expected, after you have claimed a deduction for the loss, you may have to include the extra reimbursement amount in your income for the year you receive it. However, if any part of the original deduction didn’t reduce your tax for the earlier year, don’t include that part of the reimbursement amount in your income. You don’t refigure your tax for the year you claimed the deduction. See Recoveries in Pub. 525 to find out how much extra reimbursement to include in income.

https://www.irs.gov/publications/p547#en_US_2022_publink1000225277 

[gfpstaxes]

I'm looking at the worksheet on p. 28 of pub. 525 and line 5 asks for "any amount previously refunded to you" does that refer to the recovery in 2022 for a deduction in 2021? I'm a little confused by the word "Previously" here. Can anyone clarify?