Repayment Unemployment Compensation

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  • Taxadvisor VA
    Senior Member
    • Feb 2013
    • 122

    #1

    Repayment Unemployment Compensation

    Client collected unemployment in 2011 and paid it all back in 2012.

    Tax books says to deduct repayment on Schedule A subject to the 2% limitation. (3-22)

    He was taxed on this income in 2011 and now in 2012 b/c his income is to high he doesn't get to deduct it? Something is wrong with this picture.

    It should not be subject to the 2% in my opinion.

    Anybody else run across this? Your handling?

    Thanks,


    Doug
  • Matt Sova
    Senior Member
    • Jun 2005
    • 645

    #2
    Amount

    If the amount is > $3,000 the taxpayer can claim a credit. You did not state the amount. See pg 3-22 Repayments over $3,000.
    I would put a favorite quote in here, but it would get me banned from the board.

    Comment

    • Taxadvisor VA
      Senior Member
      • Feb 2013
      • 122

      #3
      Unemployment repay

      Originally posted by Matt Sova
      If the amount is > $3,000 the taxpayer can claim a credit. You did not state the amount. See pg 3-22 Repayments over $3,000.
      Matt- Amount is < $3,000. I should have put that in my comments. It still doesn't change my position.

      Comment

      • Bees Knees
        Senior Member
        • May 2005
        • 5456

        #4
        Originally posted by Taxadvisor VA
        It should not be subject to the 2% in my opinion.
        And in my opinion, everyone should be subject to a flat 20% tax with no deductions, no exemptions, no credits, etc. When I go to the store and pay sales tax for purchasing items, nobody asks me how much money I made, how many kids I have, whether I paid college tuition for them, etc.

        We all have our opinions on how taxes should be collected. That doesn't mean it’s the law. Why should un-reimbursed business expenses be subject to the 2% AGI limitation? Aren't those legitimate expenses that should offset taxable income dollar for dollar?

        I understand it seems un-fair that the re-payment of unemployment benefits, when less than $3,000, is subject to the 2% AGI limitation. It may be un-fair, but it’s the law.

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