If I earned $20 in California and I want to claim it on my state return in order to qualify for the eitc, do I have to claim it on my federal return as well?

[JohnW152]

You almost surely need to report the income on your federal return.

Generally, income received is taxable on your federal return unless it is specifically excluded by the law.

Please see the IRS’ 2021 Publication 525 for more information.

[Taxdatass]

Thank you.

[Taxdatass]

Let's say that I elected to use my 2019 earned income in 2021 bc it was more than the $20 I earned in 2021. Can I claim the $20 of earned income from 2021 on California's tax return only, and my 2019 earned income on the federal return only, for eitc and ctc purposes?

(My income in 2021 was mostly from unemployment compensation which isn't counted as taxable income in California. I want to  claim the $20 earned income in California to qualify for the state eitc/ctc and the recovery rebate payment as well). 

[KrisD15]

I see, there may be a bit of confusion here. 

Yes, you may use your 2019 income (since it was higher) for the credits which allow for that on your Federal Tax Return. 

ONLY THE CREDITS USE THE 2019 INCOME, not the rest of the Federal Return and not what flows to the State Return. 

In other words, you report your "true" income for 2021 on your Tax Year 2021 return. THEN, when you start on the credits, such as the Earned Income Credit, if you can get a better credit using your 2019 income, the credit is calculated on that amount of income. Your 2021 income does not change, just the calculation of the credit. 

Enter only 2021 tax information into your TurboTax program until the program asks for your 2019 income to compute the credit(s).