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sapphireskies21
Returning Member

After the change in Unemployment pay, it lowers Taxable income by $10,200. If that is the case, it would make us eligible for the Earned Income tax credit. Do we amend?

If I attempt to amend, it shows that I will get about $1,200 back for unemployment. But then, removing that $10,200 would make our taxable income low enough to qualify for the Earned Income tax credit. When i try to add that to the amended return, it says we make too much. At the final step of filing the amended return, it then shows our taxable income well below the limit for the EITC.
3 Replies
macuser_22
Level 15

After the change in Unemployment pay, it lowers Taxable income by $10,200. If that is the case, it would make us eligible for the Earned Income tax credit. Do we amend?

This is what the IRS says:

 

Taxpayers should file an amended return if they:

  • did not submit a Schedule 8812 with the original return to claim the Additional Child Tax Credit and are now eligible for the credit after the unemployment compensation exclusion;
  • did not submit a Schedule EIC with the original return to claim the Earned Income Tax Credit (with qualifying dependents) and are now eligible for the credit after the unemployment compensation exclusion;
  • are now eligible for any other credits and/or deductions not mentioned below. Make sure to include any required forms or schedules.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
sapphireskies21
Returning Member

After the change in Unemployment pay, it lowers Taxable income by $10,200. If that is the case, it would make us eligible for the Earned Income tax credit. Do we amend?

Ah, I see that they are going off AGI, and not taxable income. So, with AGI, we are not eligible for EIC. But, with Taxable income, we are.

But I think both need to be under the limit.

macuser_22
Level 15

After the change in Unemployment pay, it lowers Taxable income by $10,200. If that is the case, it would make us eligible for the Earned Income tax credit. Do we amend?

Many people have earned income in the EIC range but income from other sources put the AGI over the limit.   Lowering the AGI can make them eligible, but if the earned income disqualified you then AGI  does not matter.

 

 

You can get to the Earned Credit Interview by entering "eic" (without the quotes) in the Tools -Search Topics box.

Earned Income Credit (EIC) is paid on a bell curve - starts low for a low income, increases to the maximum as income increases, then phases out as income increases still further until it is gone at the maximum income. You only get the maximum EIC if your income is about midway between no income and the maximum income.

EIC is calculated both on the amount of earned income and your AGI and you get the lessor of the two.

EIC will be found on line 27 on the 1040 form.

The credit is calculated on the EIC Worksheet that can be viewed in the forms mode in desktop versions and print all forms and worksheets in the online versions.

2020 Earned Income and Adjusted Gross Income (AGI) must each be less than:
$50,954 ($56,844 married filing jointly) with three or more qualifying children
$47,440($53,330 married filing jointly) with two qualifying children
$41,756 ($47,646 married filing jointly) with one qualifying children
$15,820 ($21,710 married filing jointly) with no qualifying children

The credit will vary from $0 to the maximum depending on income and AGI see EIC table.
Tax Year 2020 maximum credit:
$6,620 with three or more qualifying children
$5,290 with two qualifying children
$3,584 with one qualifying child
$538 with no qualifying children


Investment income must be $3,650 or less for the year.

EIC Table page 48
https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

You must be at least 25 if you do not have a qualifying child, and under 65 years of age at the end of 2020.

See IRS Pub 596 for complete information:
http://www.irs.gov/publications/p596/index.html

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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