Claim of Right Deduction
If income was repaid in the tax year and was reported and taxed on a prior Iowa return, that income may be deducted on the current tax return. You may take either the deduction or take a credit, but not both.
Example of Claim of Right Deduction
A taxpayer reported $7,000 in unemployment benefits on their Iowa return last year. Later the taxpayer was notified that $4,000 of the unemployment benefits had to be repaid. The benefits were repaid in the current tax year. The taxpayer may claim a $4,000 income adjustment on the same year Iowa return.