Repay Long Term Disability Claim

You have not said whether the disability payments received from Hartford Insurance were taxable in the years received. If they were not taxable, the repayment is merely a wash. If they were taxable income, then you have a choice as to how to handle the repayment. You mentioned Pub 525. It tells you that rather than taking an itemized deduction (Schedule A Line 16) you can elect to compute a refundable tax credit. After computing the refundable tax credit select the option (deduction or credit) that provides the larger tax benefit. Pub 525 explains how you calculate the credit. The instructions are on page 35 of the 2019 Pub. If you take the credit, it goes on the 2020 Form 1040 Schedule 3 on line 6c.

Whoops... that's Schedule 3 Line 12d. It's a refundable credit.

It has come to my attention that some if not most online versions of tax software do not allow for direct entry of data on the 1040 Schedules (e.g., TurboTax and Taxslayer Pro Online). If that is the case, then the only way to enter a clam of right tax credit on Schedule 3 Line 12d is by filing a paper return.

. . . or by using the tax software that you install on your own computer from a CD or download. With TurboTax, at least, the CD/download software has a place to make the entry in forms mode, and it can be e-filed. But you are correct that it cannot be entered in the online version.

Bob Sandler