2013 unemployment benefits repaid 2014

lwjw · #1 (**permalink**) 11-18-2015, 02:07 PM

Repaid unemployment 2013 benefits in 2014. Less than $3,000 and different year repayments seem to only get credit in miscel itemized deductions on 2014 return. How do we get credit for the tax we paid in 2013 on $2000 of 2013 benefits returned in 2014 if we didn't itemize in 2014.

Wnhough · #2 (**permalink**) 11-19-2015, 01:27 AM

Quote:

Originally Posted by lwjw

#1;Repaid unemployment 2013 benefits in 2014. Less than $3,000 and different year repayments seem to only get credit in miscel itemized deductions on 2014 return.

#2;How do we get credit for the tax we paid in 2013 on $2000 of 2013 benefits returned in 2014 if we didn't itemize in 2014.

#1;Since the amt is less than $3K,
you need to claim a miscellaneous itemized deduction on Sch A of 1040,subject to the2% of agi. UNLESS you itemize it on your return, the tax benefit is lost.As you received the benefits in 2013 and repaid them in 2014, the full amount of the benefits reported on the 1099-G is included in your 2013 income. The 2014 repayment is reported as a deduction or a credit on your 2014 return, depending on the amount.I mean, aslongas the benefit amt you repaid was more than $3K, then, you can deduct the repayment or you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. on your 2014 return.

You can enter the prior year repayment in the "wages and income" section under "Unemployment". Even if you did not receive a 1099-G for 2014.

#2;Then, you need to file 1040x to claim extra tax paid on your unemployment benefits of $2K on your 2013 return. Generally, the statute of limitations for the IRS to assess taxes on a taxpayer expires three (3) years from the due date of the return or the date on which it was filed, whichever is later -

lwjw · #3 (**permalink**) 11-19-2015, 09:27 AM

Thank you for your response. You have verified (as written in IRS pub 525), there is no option to credit the taxes paid in 2013 on $2000 returned in 2014 unless you itemize in 2014. We could not itemize in 2014, and we mistakenly credited the $2000 amount on the 2014 return as repaid and the IRS has sent a CP2057 notice asking to fix it with a 1040x for 2014, nullifying the return credit. Likely have to do the same for the state taxes as well.

Now you are suggesting the only possible option is that we file, (possibly in the future within the 3-year deadline) another 1040x for the 2013 year to recoup the excess taxes paid in 2013.

Comment and some Background:This literally happened in the months of November,2013 as a result of joining a startup with suspect funding that retroactively paid six weeks later and the benefits were paid back in January of 2014. All of this mess because of the of year. Unreal that the IRS rules make it look like you could pay taxes on unemployment benefits that were immediately returned, recognized as such on the 1099-G with no path for a current year credit. More important, the IRS provides no guidance how to get your credit. Very anxious (audit risk) about having to file one 1040x for 2014, but filing two 1040x in less than three years is probably more than we can bare. We have lost $500 in taxes, countless hours of aggravation having to deal with the payback of benefits and this subsequent tax issue, and the damn startup failed!

lwjw · #4 (**permalink**) 11-19-2015, 09:43 AM

Thank you for your response. You have verified (as written in IRS pub 525), there is no option to credit the taxes paid in 2013 on $2000 returned in 2014 unless you itemize in 2014. We could not itemize in 2014, and we mistakenly credited the $2000 amount on the 2014 return as repaid and the IRS has sent a CP2057 notice asking to fix it with a 1040x for 2014, nullifying the return credit. Likely have to do the same for the state taxes as well.

Now you are suggesting the only possible option is that we file, (possibly in the future within the 3-year deadline) another 1040x for the 2013 year to recoup the excess taxes paid in 2013. We would have to submit the 2014 1099-G to prove the amount repaid.

Comment and some Background:This literally happened in the months of November,2013 as a result of joining a startup with no current funding that retroactively paid six weeks later and the benefits were paid back in January of 2014. All of this mess because of the time of year. Unreal that the IRS rules make it look like you could pay taxes on unemployment benefits that were immediately returned, recognized as such on the 1099-G with no path for a 2014 year credit, other than a limited deduction if you itemize. More important, the IRS provides no guidance how to get your credit if you can't itemize. Very anxious (audit risk) about having to file one 1040x for 2014, but filing two 1040x in less than three years is probably more than we can bare. We have lost $500 in taxes, countless hours of aggravation having to deal with the payback of benefits and this subsequent tax issue, and the damn startup failed! Here's to taking risks to get off unemployment, a nightmare of bureaucratic crap. Given small business and new business formation is so critical to the country's future you would think, there would be more acommodation for people taking risks. Apparently, government furloughs and subsequent reconciliation due to the budget fights in Washington have caused a lot of people similar trouble.

Wnhough · #5 (**permalink**) 11-19-2015, 10:24 AM

Quote:

Originally Posted by lwjw

#1;Thank you for your response. You have verified (as written in IRS pub 525), there is no option to credit the taxes paid in 2013 on $2000 returned in 2014 unless you itemize in 2014.

#2; We could not itemize in 2014, and we mistakenly credited the $2000 amount on the 2014 return as repaid and the IRS has sent a CP2057 notice asking to fix it with a 1040x for 2014, nullifying the return credit. Likely have to do the same for the state taxes as well.

#3;Now you are suggesting the only possible option is that we file, (possibly in the future within the 3-year deadline) another 1040x for the 2013 year to recoup the excess taxes paid in 2013. We would have to submit the 2014 1099-G to prove the amount repaid.

#4;Comment and some Background:This literally happened in the months of November,2013 as a result of joining a startup with no current funding that retroactively paid six weeks later and the benefits were paid back in January of 2014. All of this mess because of the time of year. Unreal that the IRS rules make it look like you could pay taxes on unemployment benefits that were immediately returned, recognized as such on the 1099-G with no path for a 2014 year credit, other than a limited deduction if you itemize. More important, the IRS provides no guidance how to get your credit if you can't itemize. Very anxious (audit risk) about having to file one 1040x for 2014, but filing two 1040x in less than three years is probably more than we can bare. We have lost $500 in taxes, countless hours of aggravation having to deal with the payback of benefits and this subsequent tax issue, and the damn startup failed! Here's to taking risks to get off unemployment, a nightmare of bureaucratic crap. Given small business and new business formation is so critical to the country's future you would think, there would be more acommodation for people taking risks. Apparently, government furloughs and subsequent reconciliation due to the budget fights in Washington have caused a lot of people similar trouble.

#1;Correct as said. Filing 1040x for 2013 is the only way to get refund the tax paid on the benefits of $2K.

#2; I THINK SO; AS YOU AMEND YOUR 1040 YOU ALSO NEED TO AMEND YUR STATE RETURN. The IRS CP2057 is a notice indicating that there was a discrepancy between something you reported on your return to the IRS and something some third party reported about what they either paid you or received from you.So due to the discrepancy, your income is higher(lower) and, as a result, your taxable income is higher(lower) and thus your tax is higher(lower). So, you need to check and see what the correct information is and, as a change is necessary (since your original return has some incorrect information on it) you need to file 1040x for 2014.

#3;Correct. You have until the later of 3 years from the date of the original deadline of the tax return( apr 15 2014) or 2 years from the date the tax was actually paid to claim a refund of overpaid taxes from the IRS.

#4;I guess they do nt care about i t very seriously. The bottom-line; in the case of overpayment/wrong pmt, they usually stay on your record until repaid. So, basically you must repay those benefits even if the overpayment was not your fault as they cannot pay you benefits if you have an overpayment/wrong pmt.

Also please remember; you can not e-file an amended returns. You have to print it, sign it, and mail it to the IRS. Make sure you sign both the 1040 and the 1040Xs.

lwjw · #6 (**permalink**) 11-19-2015, 11:28 AM

We already e-filed the 2014. To be clear the cp2057 was issued because we credited 2014 benefits (the startup failed) with the $2000 2013 repayment which was recognized on the 2014 1099-g in box 2 as adjustments. We have since learned you cant do that. Hence we intend to file 1040x and pay back the resulting additional tax.

Question: We only intend to send by mail the 1040x with an explanation and a check for the resulting tax. We have read not to include anything that is not absolutely necessary. Should we send a copy of the 1099-G as well? We have no intention of sending the 1040 which we originally e-filed. Thank you.

Wnhough · #7 (**permalink**) 11-20-2015, 12:44 AM

Quote:

Originally Posted by lwjw

.

Question: We only intend to send by mail the 1040x with an explanation and a check for the resulting tax. We have read not to include anything that is not absolutely necessary. Should we send a copy of the 1099-G as well? We have no intention of sending the 1040 which we originally e-filed. Thank you.

Question: We only intend to send by mail the 1040x with an explanation and a check for the resulting tax. We have read not to include anything that is not absolutely necessary. ==>>Correct; in general, you need to attach copies of all the original documentation that you attached to original Form 1040(copies of any schedules that are changing)to the Form 1040x; if the IRS has any questions / requires any additional documentation, they will send you a leteer. If you have not been clear in your explanations on what you are changing on Form 1040X, they may return the form to you. It may take 8-12 weeks, or longer, for the IRS to process the 1040x.

The IRS may look at amended tax return a little more carefully than your original return so you want your return to be flawlessalso,Your state tax liability will very likely be affected if you need to file an amended federal tax return. Check with your state dept of revenue to see how to correct your state return if need be.

Should we send a copy of the 1099-G as well? We have no intention of sending the 1040 which we originally e-filed=> Forms 1099 weren't required on the original return if there was no tax withholding and would not be required with the amended return No originally efiled 1040 needs to be sent but You only need to include the Form 1040-X and copies of any schedules that changed.

Wnhough · #8 (**permalink**) 11-20-2015, 12:51 AM

Quote:

Originally Posted by lwjw

1099-G as well? We have no intention of sending the 1040 which we originally e-filed. Thank you.

You should NOT attach Form 1099-G to your income tax return