Client received unemployment in 2020 ( $10,569) . Client received a notice from her state ( April 2021) that there was an overpayment and that she has to repay $600. Return for 2020 has not been filed yet. Client intends to repay the $600. Client has not received any unemployment in 2021, is back to work and will not have any unemployment in 2021. Do I file the return and reduce the amount by $600 and add a statement to the return or is there another option I can take?
Did she even have enough other income to pay tax? Or is she in a 17% federal and state bracket so this is a $64 question that concerns $369? I would tell her I'm doing her a favor and forgetting she even asked so I don't have to bill her for advice. (Although Claim of Right won't work -- that could be a profit center.)