Page 60 - Virtual Currencies

8:29 - 7-Feb-2023
Page 37 of 43
Fileid: … tions/p525/2022/a/xml/cycle08/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
These allowances aren't considered scholar- The amount of the rate reduction or nonrefund- Method 1. Figure your tax for the year of
ship or fellowship grants. able credit isn't included in your income. repayment claiming a deduction for the repaid
Prizes. Scholarship prizes won in a contest Whistleblower's award. If you receive a whis- amount.
aren't scholarships or fellowships if you don't tleblower's award from the IRS, you must in- Method 2. Figure your tax for the year of
have to use the prizes for educational purpo- clude it in your income. Any deduction allowed repayment claiming a credit for the repaid
ses. You must include these amounts in your in- for attorney fees and court costs paid by you, or amount. Follow these steps.
come on Schedule 1 (Form 1040), line 8i, on your behalf, in connection with the award are 1. Figure your tax for the year of repayment
whether or not you use the amounts for educa- deducted as an adjustment to income, but can't without deducting the repaid amount.
tional purposes. be more than the amount included in income for
the tax year. 2. Refigure your tax from the earlier year
Smallpox vaccine injuries. If you're an eligi- without including in income the amount
ble individual who receives benefits under the you repaid in the year of repayment.
Smallpox Emergency Personnel Protection Act Repayments
of 2003 for a covered injury resulting from a 3. Subtract the tax in (2) from the tax shown
covered countermeasure, you can exclude the on your return for the earlier year. This is
payment from your income (to the extent it isn't If you had to repay an amount that you included the credit.
allowed as a medical and dental expense de- in your income in an earlier year, you may be 4. Subtract the answer in (3) from the tax for
duction on Schedule A (Form 1040)). Eligible able to deduct the amount repaid from your in- the year of repayment figured without the
individuals include health care workers, emer- come for the year in which you repaid it. Or, if deduction (step 1).
gency personnel, and first responders in a the amount you repaid is more than $3,000, you
smallpox emergency who have received a may be able to take a credit against your tax for If method 1 results in less tax, deduct the
smallpox vaccination. the year in which you repaid it. In most cases, amount repaid. If method 2 results in less tax,
you can claim a deduction or credit only if the claim the credit figured in (3) above on Form
Stolen property. If you steal property, you repayment qualifies as an expense or loss in- 1040 or 1040-SR. (If the year of repayment is
must report its FMV in your income in the year curred in your trade or business or in a for-profit 2021, and you're taking the credit, enter the
you steal it, unless in the same year you return it transaction. credit on Schedule 3 (Form 1040), line 13d, and
to its rightful owner. see the instructions for it.)
Type of deduction. The type of deduction
Transporting school children. Don’t include you're allowed in the year of repayment de- Example 40. For 2021, you filed a return
in your income a school board mileage allow- pends on the type of income you included in the and reported your income on the cash method.
ance for taking children to and from school if earlier year. In most cases, you deduct the re- In 2022, you repaid $5,000 included in your
you aren't in the business of taking children to payment on the same form or schedule on 2021 income under a claim of right. Your filing
school. You can't deduct expenses for provid- which you previously reported it as income. For status in 2022 and 2021 is single. Your income
ing this transportation. example, if you reported it as self-employment and tax for both years are as follows.
income, deduct it as a business expense on
Union benefits and dues. Amounts deducted Schedule C (Form 1040) or Schedule F (Form 2021
from your pay for union dues, assessments, 1040). If you reported it as a capital gain, de- With Income Without Income
contributions, or other payments to a union duct it as a capital loss as explained in the In- Taxable
can't be excluded from your income. structions for Schedule D (Form 1040). If you Income $15,000 $10,000
For tax years beginning after 2017, you can reported it as wages, unemployment compen- Tax $1,604 $1,004
no longer deduct job-related expenses or other sation, or other nonbusiness income, you may
miscellaneous itemized deductions subject to be able to deduct it as an other itemized deduc- 2022
the 2%-of-adjusted-gross-income floor. tion if the amount repaid is over $3,000. Without Deduction With Deduction
Strike and lockout benefits. Benefits paid For tax years beginning after 2017, you Taxable $49,950 $44,950
Income
to you by a union as strike or lockout benefits, ! can no longer claim any miscellaneous
itemized deductions; so, if the amount
including both cash and the FMV of other prop- repaid was $3,000 or less, you aren’t able to Tax $6,606 $5,506
CAUTION
erty, are usually included in your income as Your tax under method 1 is $5,506. Your tax
compensation. You can exclude these benefits deduct it from your income in the year you re- under method 2 is $6,006, figured as follows.
paid it.
from your income only when the facts clearly
show that the union intended them as gifts to
you. Repaid social security benefits. If you re- Tax previously determined for 2021 . . . . . . $1,604
paid social security or equivalent railroad retire- Less: Tax as refigured . . . . . . . . . . . . . . . − 1,004
Reimbursed union convention expen- ment benefits, see Pub. 915. Decrease in 2021 tax . . . . . . . . . . . . $ 600
ses. If you're a delegate of your local union
chapter and you attend the annual convention Repayment over $3,000. If the amount you Regular tax liability for 2022 . . . . . . . . . . . . $6,606
of the international union, don't include in your repaid was more than $3,000, you can deduct Less: Decrease in 2021 tax . . . . . . . . . . . . − 600
income amounts you receive from the interna- the repayment as an other itemized deduction Refigured tax for 2022 . . . . . . . . . . . $6,006
tional union to reimburse you for expenses of on Schedule A (Form 1040), line 16, if you in-
traveling away from home to attend the conven- cluded the income under a claim of right. This You pay less tax using method 1, so you should
tion. You can't deduct the reimbursed expen- means that at the time you included the income, take a deduction for the repayment in 2022.
ses, even if you're reimbursed in a later year. If it appeared that you had an unrestricted right to
you're reimbursed for lost salary, you must in- it. However, you can choose to take a credit for Repaid wages subject to social security
clude that reimbursement in your income. the year of repayment. Figure your tax under and Medicare taxes. If you had to repay an
both methods and compare the results. Use the amount that you included in your wages or com-
Utility rebates. If you're a customer of an elec- method (deduction or credit) that results in less pensation in an earlier year on which social se-
tric utility company and you participate in the tax. curity, Medicare, or tier 1 RRTA taxes were
utility's energy conservation program, you may paid, ask your employer to refund the excess
receive on your monthly electric bill either: When determining whether the amount amount to you. If the employer refuses to refund
• A reduction in the purchase price of elec- ! you repaid was less than $3,000, con- the taxes, ask for a statement indicating the
tricity furnished to you (rate reduction), or CAUTION sider the total amount being repaid on amount of the overcollection to support your
• A nonrefundable credit against the pur- the return. Each instance of repayment isn't claim. File a claim for refund using Form 843.
chase price of the electricity. considered separately.

Publication 525 (2022) Page 37