ESD overpayment in 2023 repaid in 2024 - how to report this on taxes?
I'm completely stuck on how to handle this tax situation with my unemployment benefits. I received about $8,200 in ESD benefits during the first half of 2023, but then found out I was disqualified for $3,450 of that amount because of an employer appeal. I ended up repaying that money to ESD in January 2024, but my 1099-G from Washington still shows the full $8,200 for 2023. I'm using FreeTaxUSA Deluxe this year since my situation is more complicated than normal. Has anyone dealt with this repayment situation before? Do I report the full amount on my 2023 taxes even though I paid some back in 2024? And has anyone used FreeTaxUSA's customer support for complicated unemployment questions like this? Wondering if they're actually helpful or if I need to bite the bullet and pay for an accountant.
14 comments
Join the conversation
Gael Robinson
You need to report the full amount shown on your 1099-G for 2023, even if you repaid some of it in 2024. The repayment will affect your 2024 taxes, not 2023. You have two options for handling the repayment: 1. If the repayment is under $3,000, you can claim it as an itemized deduction on Schedule A for 2024 2. If it's over $3,000, you can take a credit for the amount of tax you paid on that income in the prior year Since your repayment is $3,450, option #2 would be better for you. FreeTaxUSA should be able to handle this for 2024, but you'll need to keep documentation of your repayment.
0 coins
Summer Green
•Thank you! That makes a lot of sense. So for my 2023 return, I just report the full $8,200 even though I've already repaid some? That seems weird but I guess that's how the system works. Have you personally used FreeTaxUSA's customer support? I'm wondering if they'll be able to help me with the credit calculation next year since that sounds complicated.
0 coins
Edward McBride
i had almost exact same situation last yr!!! ESD paid me then said i wasnt eligible and i had to pay back $2700 but it was after new years. freaking nightmare with taxes. i just put what was on my 1099G and did the itemized deduction thing the next year. but make SURE u save ur receipt from ESD showing u paid it back!!! they never sent me anything showing i repaid and it was a MESS trying to prove it later
0 coins
Darcy Moore
•This is a really important point about documentation. Make sure you have a screenshot of the ESD portal showing the repayment transaction, the confirmation email, and if possible, call ESD and ask them to mail you a written confirmation of the repayment. You'll need this for your 2024 taxes and potentially for any IRS questions about your 2023 return.
0 coins
Dana Doyle
I'm dealing with a similar issue right now. I had to repay about $4,200 to ESD this January for benefits from 2023. I called FreeTaxUSA customer support yesterday about this exact question. The rep was knowledgeable but told me I'd need to consult with a tax professional for this specific situation to make sure I handle it correctly for both tax years. They couldn't give specific advice on how to claim the credit in 2024 for taxes paid on the repaid amount. For what it's worth, I ended up scheduling a consultation with a CPA who specializes in tax issues. It's costing me $125 for a 30-minute call, but I think it's worth it given the amount involved and the complexity.
0 coins
Summer Green
•This is super helpful to know! So it sounds like FreeTaxUSA support might not be sufficient for this kind of specialized question. $125 actually doesn't sound terrible if the CPA can walk you through exactly what to do for both years. Would you mind sharing how you found a CPA who specializes in this? Did you just Google or ask for recommendations?
0 coins
Liam Duke
Just an FYI - I had HUGE problems getting through to ESD when I needed documentation for a similar tax situation. I was on hold for HOURS and kept getting disconnected. I finally used Claimyr (claimyr.com) to get through to an ESD agent quickly. They have a video demo at https://youtu.be/7DieNd3C7zQ?si=26TzE_zGms-DODN3 that shows how it works. Saved me so much time and I was able to get the written documentation I needed for my tax records. Might be worth it if you need to get any additional paperwork from ESD about your repayment.
0 coins
Edward McBride
•omg thank u for this!! ive been trying to get thru to esd for 2 weeks to get written proof of my repayment! def gonna try this service
0 coins
Manny Lark
FreeTaxUSA customer service is actually pretty good for most things but probably not for this specific issue. They helped me with some basic unemployment tax questions last year but nothing as complicated as repayments across different tax years.
0 coins
Dana Doyle
•That matches my experience. Their support was friendly and helped with general unemployment tax questions, but they specifically told me they couldn't advise on the repayment situation since it involves potential credits across multiple tax years.
0 coins
Rita Jacobs
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.
0 coins
Summer Green
•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.
0 coins
Darcy Moore
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.
0 coins
Summer Green
•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.
0 coins