I just received a correspondence from the IRS stating I am eligible for the Earned Income Credit. I through the steps in TurboTax, and it stated I wasn't eligible.

[lrudek]

I went back to TurboTax, and it stated the eligibility is based on 2019 earned income, but the correspondence states earned income is based on 2021.  Did anyone come across this issue?

[leigh7ray]

I had the same issue! You would think after all the money we spend on Turbo Tax "FREE" service they would have caught this! Now I am waiting months to receive this credit. I have been using TT for years and I'm DONE!

[NCperson]

@lrudek - here is the issue on 2019 vs 2021 earned income

As part of the COVID legislation, Congress was concerned that so many people lost their jobs that they would lose the benefit of the Earned Income Tax Credit which is based on earned income.

So they said that if your 2019 earned income is greater than your 2021 earned income AND it yields a higher tax credit, then use the 2019 earned income to calculate the tax credit.  When you input your 2019 earned income into TT, TT will determine if there is a benefit.

Look at the table below, I can tell you that if your 2021 earned income is greater than the numbers in the table, there is NO benefit using 2019 earned income as the 2021 earned income will yield a better tax credit.  if your 2021 earned income is BELOW the numbers in this table it MAY be a benefit to use 2019 (the math is complex so not explained here) 

	Single / HOH/ MFS / Qual Widow	Married – Joint
0 Children	$9,800	$9,800
1 Child	$10,600	$10,600
2 Children	$14,950	$14,950
3 Children	$14,950	$14,950

does that help?

[lrudek]

The correspondence I received from the IRS is AFTER I submitted my 2021 tax return.  I am sure the IRS was aware of my earned income before they sent the correspondence.  My parents did not receive the same letter. 

According to the correspondence, it states I am eligible to receive the EIC because my reportable income was below the threshold, which is $51,464 for single filers.  This is based on publication 596, which is referenced in the letter.  I went ahead and completed the form, and we will see what happens.  I will give an update on the final results, but if I end up receiving the $1,501.00 from the IRS, then my trust with TurboTax will be questionable for 2022 file return.

[lrudek]

After I received the letter from the IRS, I went back to Turbo Tax to see if I missed a step.  I went through the updates (maybe something had changed after I filed), and it kept referencing to 2019 income, which I don't understand why 2019.   I researched this more on the IRS website after receiving the letter, and there is NO reference regarding 2019 income.  The only reference is Publication 596, which is also stated within the IRS letter.  I've used Turbo Tax for many, many years filings, but I will be disappointed if I do end up receiving this $1,501.00.  I think I'm going to trust the IRS more than Turbo Tax.

[NCperson]

@lrudek - I am a little confused, but trying to help you out

1) review my response above on the reason the IRS noted the 2019 tax return.  

2) if you are a dependent on your parent's tax return, YOU ARE NOT ELIGIBLE for EITC

3) You are only eligible for EITC if your income is LESS THAN the numbers in the table below

hildren or Relatives ClaimedMaximum AGI
(filing as Single, Head of Household, Widowed or Married Filing Separately*)Maximum AGI
(filing as Married Filing Jointly)ZeroOneTwoThree

$21,430	$27,380
$42,158	$48,108
$47,915	$53,865
$51,464	$57,414

[lrudek]

Dear NCperson, I was not asking for your help.  My whole point in posting is to see if anybody else came across this similar situation, which I believe one person did.  I will be dealing with the IRS from this point going forward.  So no need for you to re-copy and re-paste the same thing.  There's nothing Turbo Tax can help at this point.  I'm waiting on the IRS to respond.  Thank you!

[cc102bob]

I used TurboTax to help my daughter do her taxes and she ended up getting the same letter from the IRS. I, too, went back into TT and tried to figure out why it didn't think she was eligible for the EIC. The only thing I can figure out, and I really don't know if this is the true issue, is that the TT help states that to be eligible for the EIC, you can't be a student. The IRS publication for the EIC does not mention anything about being a student, so I'm wondering if the TT people didn't catch that change.

Just FYI - my daughter is a student, but she is not claimed as a dependent on anyone else's taxes, so she met every criteria specified by the IRS for the EIC. She sent the letter back to the IRS yesterday, so we are hoping she gets a nice check soon!

[lrudek]

Thank you so much, cc102bob!  Same scenerio so your reply was very helpful.  Let's cross our fingers!

[NCperson]

here is the offical IRS calculator to determine eligibility for EITC

note that like other tax benefits, if you CAN be claimed as a dependent (e.g. a college student) you are not eligible for EITC, even if your parents did not claim you. 

there are rules about students claimsing EITC and in many cases they are not eligible (but in other cases they are), which will be evident when going through these eligiblity rules for EITC.  As this is directly from the IRS website, it'll be the same rules used to review anyone's tax return.

https://apps.irs.gov/app/eitc

https://apps.irs.gov/app/eitc

[cc102bob]

Well isn't that just the most interesting thing...   Using the IRS website linked above, my daughter does not qualify because she's a student. Buuut... The IRS itself reviewed her return and believes she is eligible. The form they sent with a list of things that would disqualify her does not include anything about being a student.  Looks like the right hand doesn't know what the left hand is doing.

I told her to make a copy of the form she sent in case they send her money now and then in a few months demand it back because she wasn't eligible.

Imagine that...  Dealing with the IRS creates confusion!  Whodathunk?

[NCperson]

@cc102bob - on your daughter's tax return, there is a box that needs to be checks if someone CAN claim her (it doesn't ask if someone actually claimed her). 

did she check the box?  if you CAN claim your daughter, she is ineligble for EITC.

should she have checked the box?  

[cc102bob]

The strange part about all this is that both the TurboTax software and the tool on the IRS website said she was not eligible for the EIC. We did not attempt to claim it when we filed her taxes. The IRS apparently ran her electronically submitted tax return through their system and their system believes she is eligible. The IRS mailed her a document stating she may be eligible and that she should fill out the included work sheet to determine if she was. She answered all the questions on that worksheet and there was nothing that disqualified her.

Like I said - it appears that one part of the IRS doesn't know what the other part is doing.