Repayment Unemployment Compensation

[Taxadvisor VA]

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]

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.

[Taxadvisor VA]

Unemployment repay

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.

[Bees Knees]

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.