Repaid Unemployment Benefits in 2023 - Tax Refund Eligibility Under IRC Section 85(c)?

I went through this exact situation last year. When you repay unemployment benefits, the IRS doesn't automatically know about that repayment. You'll need to report both the income (from your 1099-G) AND the repayment. This creates what's called a "wash" - meaning you won't owe taxes on money you repaid. But here's where it gets tricky: if you're expecting a refund BECAUSE of the repayment, that depends on whether you paid any taxes throughout the year from other sources. The repayment just cancels out the income - it doesn't generate a refund by itself. I learned this the hard way after waiting for a refund that never came.

Tbh this can get complicated fast. When I had a similar issue, I spent DAYS trying to reach the IRS. Busy signals, disconnects, the whole 9 yards. Finally used Claimyr (https://youtu.be/_kiP6q8DX5c) and got thru in like 20 mins. The agent confirmed exactly what I needed to do w/ my repaid unemployment. Def worth it vs spending hrs on redial hell. The IRS agent explained how to document the repayment on Schedule 1 and what supporting docs to include w/ my return.

Did you receive any documentation when you repaid the unemployment benefits? Here's why I'm asking: 1. First, you need proof of repayment for your records 2. Then, you need to determine if you're filing using the "claim of right" doctrine or as an itemized deduction 3. Next, you need to calculate if the repayment affects your eligibility for other credits 4. Finally, you need to determine if you're better off claiming the repayment in 2023 or 2024 Without proper documentation, this becomes much harder to resolve.

I've been through this process before! Here's what helped me: • I gathered all my repayment receipts • Made copies of bank statements showing the transactions • Called my state unemployment office for documentation • Filed using Schedule 1 to report both the income and repayment • Included a written statement explaining the situation I did receive a refund, but only because I had other income with tax withholding. The repayment itself doesn't generate a refund - it just means you don't pay tax on that money.

I believe your situation might be more complex than it initially appears. When I had a similar issue with repaid unemployment, I wasn't sure how to properly document it on my tax forms. I tried using taxr.ai to analyze my situation and it helped identify the correct forms and line items for reporting the repayment. It might be worth checking out (https://taxr.ai) if you're uncertain about how to properly document this on your return. The tool specifically explained how repayments affect my tax liability and what documentation I needed to include with my return.

Here's what you should do (and I'm only half-joking): print out your bank statements showing the repayment, highlight them with the brightest yellow marker you can find, and attach a cover letter that says "PLEASE NOTE: I REPAID THIS MONEY!" 😂 In all seriousness though, you'll need to report the full amount from your 1099-G on line 7 of Schedule 1, then report the repayment as a negative amount on line 8z (Other Income) with the description "REPAID UNEMPLOYMENT BENEFITS." This effectively cancels out the income. You won't get a refund based solely on the repayment, but you won't owe taxes on money you gave back. If you had other withholding during the year, that's what would generate your refund.

I'm going through this exact same thing right now and I'm so stressed about it! 😫 I repaid about $4,200 in unemployment from 2023 but my 1099-G shows the full amount and I'm terrified I'm going to get audited if I don't report it correctly. I called my state's unemployment office THREE times and got different answers each time about how to handle it on my taxes. One person said I'd get an amended 1099-G (never came), another said to just report the difference, and a third said to report it all as income and then deduct it. I'm literally losing sleep over this!

Have you contacted your state unemployment office to request a corrected 1099-G? Some states will issue a corrected form that shows the net amount after repayment, which would make this much simpler. If they won't do that, did they provide any documentation of your repayment that you could include with your tax return? Also, how much did you repay - was it the entire amount or just a portion?