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This is actually covered in IRS Publication 525 under "Repayments." I think its called the "claim of right doctrine" or something like that. Basiaclly since you received it in 2023 and thought it was yours at the time, you have to report it on your 2023 taxes. Then when you repay in 2024, you get either the deduction or credit in 2024. The credit is definitely better if your repayment is over $3000, which yours is. I use TurboTax, not FreeTaxUSA, but I'm pretty sure any tax software can handle this for your 2024 taxes. I just wouldn't trust their customer support reps to know all the details on stuff like this.
Thank you for mentioning the specific IRS publication! I'll look that up. The "claim of right doctrine" gives me something specific to research. Maybe I'll try FreeTaxUSA for this year's taxes since I just need to report the full amount on my 1099-G, then consider switching to something else or using a CPA next year for the repayment credit part.
To summarize what others have said, but with a bit more tax code specificity: 1. For 2023: Report the full amount from your 1099-G ($8,200) 2. For 2024: You'll have two options since your repayment was over $3,000: a. Take an itemized deduction on Schedule A (less favorable) b. Take a tax credit under IRC Section 1341 for the tax you paid on that income in 2023 (more favorable) FreeTaxUSA should handle the basic reporting for 2023 just fine. For 2024, you might need more help with the Section 1341 credit. I'd recommend saving about $200-300 for professional tax help next year unless you're very comfortable with tax calculations.
Thank you for breaking it down so clearly with the specific tax code reference! This makes me feel much better about what to do. I'll use FreeTaxUSA for 2023 since that part is straightforward, and then plan ahead for getting professional help with my 2024 return when I'll need to deal with the Section 1341 credit.
That's great you found out what the issue is! Now you can properly address it. Make sure to submit any documentation they requested through your eServices account under the "Upload a Document" section. Label it clearly like "Proof of layoff for adjudication" so it gets routed correctly. Most adjudications get resolved within 3-4 weeks if you provide all the requested information promptly.
I hate to be that person but double check everything ESD does. When I won my appeal they still messed up my payments. They only paid 4 of the 7 weeks I was owed. Had to call multiple times to get it fixed. Screenshot everything and keep detailed notes of every conversation with them!!!
Update us when you get paid! I'm curious if processing times have improved since my experience last year. Also congrats on working with ULP - they're amazing! They helped my brother with his appeal too.
Just wanted to follow up - after you visit WorkSource, make sure to get the name of the person who assists you and request that they document your visit in your claim notes. This creates a paper trail showing your efforts to resolve the issue. Additionally, if it's been 10 weeks, you might qualify for a hardship expedition based on your housing situation. Specifically mention to both your state representative and WorkSource that you're facing potential eviction. This can sometimes fast-track your claim review.
good luck tomorrow at WorkSource! just a heads up you might want to get there when they open, sometimes theres a wait and they can only help a certain number of people each day. i had to wait like 2 hours but it was worth it
Lukas Fitzgerald
Thanks everyone for the super helpful responses! I'm going to file my initial claim tomorrow and make sure I report the severance correctly. I'll also keep doing the weekly claims even though I probably won't receive anything during the severance period. I appreciate all the advice!
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Marcelle Drum
•good luck! the ESD system is confusing but stick with it
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Collins Angel
One last tip - make sure you start fulfilling your job search requirements right away, even during the severance period. You need 3 job search activities each week, and you have to document them. ESD can audit your job search log at any time. This is something many people miss and can cause problems with your claim later.
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Lukas Fitzgerald
•Oh that's really good to know! Do activities like updating my resume or setting up job alerts count toward the 3 weekly activities?
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Collins Angel
•Updating your resume counts as ONE activity for ONE week only. Job alerts don't count by themselves. The most straightforward activities are job applications, attending job fairs, and having job interviews. There's a full list of acceptable activities on the ESD website under the job search requirements section.
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