Repayment Under Claim of Right IRC 1341

Jim there is a whole section on this on page 3-26 of the federal tax book deluxe edition. It looks like it depends on whether the amount is $3,000 or less or greater than 3,000. Looks like if it is $3,000 or less and the income was previously reported as wages then no deduction is allowed. If more than $3,000 it states to claim a deduction on line 16 of schedule A or to claim a credit that apparently goes to line 13B schedule 3. I cannot recall having this before so you should read the whole section to make sure.

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@Jim-from-Ohio wrote:

 Is there a certain line on Schedule A that it goes on? Looking at program thinking line 31.

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I'm wondering why your Schedule A has significantly more lines than my Schedule A.  🤣

Line 16.

https://www.irs.gov/publications/p525#en_US_2023_publink1000229603

https://www.irs.gov/instructions/i1040sca#en_US_2023_publink100073879

I wasn't sure that deduction had not been placed on hiatus by TCJA, so I did a word search for "claim of right" on the Schedule A instructions and found it's still there, along with a reference to Pub 525.  Not that some IRS pubs don't have lengthy explanations of some itemized deductions with short warnings that they are not currently available. 

I grouped this blue-moon situation with the more familiar foreign tax credit, where it's always better to take the credit rather than the deduction.  Except when it isn't, and I don't want to clutter my mind with those details.  But I think with Section 1341, it mostly involves a comparison of the highest tax bracket in the year of receipt, and the highest tax bracket in the year of repayment.  Also, it's a no-brainer if the taxpayer is not itemizing.  

You sure the credit isnt more bang for your buck than the Sch A deduction?