NEW CLIENTS! Get in Touch Today for a FREE Business Assessment!

Learning Center
We keep you up to date on the latest tax changes and news in the industry.

Understanding the Claim of Right Tax Relief

If you run a service-based business in Montana or the surrounding states—whether you are a subcontractor, a real estate professional, or a small business owner—you know that income flow can occasionally be complicated. Sometimes, you may find yourself having to repay income that you previously reported and already paid taxes on during a prior year. If this happens, you may qualify for a specific type of tax relief in the repayment year known as "Claim of Right."

IRS building and tax guidance

The rules for this special tax relief are provided by IRC Section 1341. Under this provision, taxpayers are allowed to choose between taking a tax deduction or a tax credit for the repaid amount. However, there is a strict threshold to keep in mind: this relief only applies if the repayment amount exceeds $3,000.

Speak To An Expert
Speak to an expert today on how we can help your business
Get Started

Keeping Your Taxes Optimized During Repayments

Managing unexpected income repayments can feel stressful, but utilizing the proper relief keeps the tax leg of your business's "three-legged stool" completely solid. If you are dealing with a repayment of previously taxed income exceeding $3,000 and need help determining how IRC Section 1341 applies to your situation, reach out to our Billings office to schedule a consultation.

Speak To An Expert
Speak to an expert today on how we can help your business
Get Started
Share this article...

Want tax & accounting tips and insights?

Sign up for our newsletter.

I confirm this is a service inquiry and not an advertising message or solicitation. By clicking “Submit”, I acknowledge and agree to the creation of an account and to the and .
Clarity Tax + Accounting Hello! How can we help?
Welcome to ClarityBot--your smart assistant for clarifying payroll, bookkeeping and tax!
Please fill out the form and our team will get back to you shortly The form was sent successfully