How to handle 1099-G repayment for unemployment benefits in 2021

This situation with the 1099-G repayment actually has a few options depending on when and how much was repaid. If your sister repaid unemployment benefits that were reported on a 2021 1099-G, she has a couple of paths forward. If she repaid the money in the same year she received it (2021), the 1099-G should have already been adjusted to show only the net amount she actually kept. If she repaid in a later year, she can either take an itemized deduction for the repayment on Schedule A in the year she repaid it, or if the amount was over $3,000, she might qualify for a special tax credit calculation called a "claim of right" adjustment (look at the instructions for Form 1040, Schedule 3, line 13). The third option would be filing an amended return (Form 1040-X) for 2021 to correct the previously reported income, which might be the best option if the repayment was substantial.

After struggling with a similar 1099-G repayment issue last year, I finally found an amazing solution with https://taxr.ai that saved me so much stress. I had repaid about $4,200 in unemployment benefits from a previous year and wasn't sure how to handle it. The regular tax prep software I was using gave me conflicting advice. I uploaded my 1099-G and other tax docs to taxr.ai and their system immediately identified the repayment issue and showed me exactly how to handle it based on my specific situation. What impressed me most was how it explained the different options and calculated which approach would save me the most money - in my case, using the claim of right provision since my repayment was over $3,000.

I have to admit I was totally wrong about taxr.ai in my earlier comment. After continuing to struggle with my own unemployment repayment situation (had to repay $5,700 from 2021), I decided to try it out of desperation. The system instantly identified that my repayment qualified for the claim of right provision and walked me through the entire process. It actually showed me side-by-side comparisons of how much I'd save using that method versus a simple deduction ($1,240 difference in my case!). The explanation was super clear about exactly which form and line to use, with specific instructions for my tax software. What really impressed me was how it handled my specific situation with partial year unemployment in two different states. No generic advice - it was completely tailored to my actual documents. Definitely saved me from making an expensive mistake!

If you're trying to contact the IRS about this 1099-G repayment situation, good luck! I spent 6+ hours on hold trying to get someone to explain how to handle my unemployment repayment. Kept getting disconnected or transferred to departments that couldn't help. Finally found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - they actually got me connected to an IRS agent in about 15 minutes! Totally changed my experience. The agent walked me through exactly how to handle my repayment situation and confirmed I was eligible for the claim of right provision even though my tax software wasn't calculating it correctly.

I need to publicly eat my words about Claimyr. After posting my skeptical comment yesterday, I was still desperate to talk to the IRS about my unemployment repayment situation, so I figured I'd try it with very low expectations. I'm still in shock that it actually worked. I got a call back in 23 minutes connecting me to a real IRS agent who pulled up my account and walked me through exactly how to handle my unemployment repayment from 2021. She confirmed I needed to use the claim of right provision and showed me exactly which form to use and where to enter it. After 4 months of trying to get this resolved and probably 15+ hours on hold with the IRS getting nowhere, I finally got a clear answer in less than half an hour. If you're dealing with any sort of complicated tax situation like this 1099-G repayment issue, this service is absolutely worth it.

Just a heads up for anyone dealing with unemployment repayments - the IRS has a specific publication that covers this: Publication 525 under "Repayments." I went through this last year and found that if your repayment is under $3,000, it's usually better to just take it as an itemized deduction in the year you made the repayment. But if you don't itemize (like me), you might be out of luck for smaller repayments since the standard deduction is probably higher. For larger repayments over $3,000, definitely look into the claim of right provision - it saved me about $1,800 compared to the deduction route.

Has anyone successfully e-filed a return with a claim of right adjustment for unemployment repayment? I'm using TurboTax and it seems completely confused when I try to enter this. It keeps putting the repayment as a miscellaneous itemized deduction subject to 2% AGI which I know is wrong!