I repaid my unemployment. Where do I enter in the software?

To report the repayment of unemployment compensation in the OLT software, follow these steps: Within the Federal menu, click on Income, then select Unemployment Compensation. The software will prompt you with questions regarding repayment. If you repaid unemployment compensation that you previously included in your income in an earlier year, the treatment depends on the amount repaid. If the amount repaid exceeds $3,000, you may either claim a deduction or a credit under the claim of right rules. The deduction is reported as an Other Itemized Deduction on Schedule A (Form 1040) (Part II — Other Itemized Deductions), if you itemize. Alternatively, you may choose to claim a credit on Schedule 3 (Form 1040) (Part II — Other Credits and Payments) for repayment of income under IRC §1341. The IRS allows you to choose the method (deduction or credit) that results in less tax. For repayments made in the same tax year as the original receipt, subtract the repaid amount from the total received and enter the difference on Schedule 1 (Form 1040), line 7, noting “Repaid” and the amount on the dotted line.

Repayment Methods

• Deduction: If you itemize deductions and the repayment amount is $3,000 or less, you may claim a deduction only. If the repayment exceeds $3,000, you may still choose the deduction. Report it on Schedule A (Form 1040) (Part II — Other Itemized Deductions).
• Credit: If the repayment exceeds $3,000, you may claim a credit under IRC §1341 on Schedule 3 (Form 1040) (Part II — Other Credits and Payments). Compare both methods to determine which reduces your tax liability more..
• Same-Year Repayment: If repaid in the same year as receipt, subtract the repaid amount from total unemployment received and report the net amount on Schedule 1 (Form 1040), line 7, with a note “Repaid” and the amount.

Source:

Publication 525 (2025)
Publication 17 (2025)

Disclaimer: Always verify details with the current year’s Federal or State Department of Revenue Forms and Instructions. For complex situations, consult a CPA or tax attorney.