Taxpayer received unemployment compensation in 2005 and he has paid the tax on it when he filed the tax return in 2006. Then later in 2006, he was required to repay part of the unemployment compensation which he has paid tax on already. The repaid amount shows up on a 2006 Form 1099-G. He did not receive unemployment compensation in 2006. What does he do with the amount that he has repaid? Can he claim it as a deduction in 2006 or shall he amend his 2005 tax return? If he can claim a deduction on it in 2006, where does he claim it? Thank you.
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