The Taxpayer Certainty and Disaster Tax Relief Act of 2020 has a “lookback” provision that allows you to use your 2019 earned income instead of your 2020 earned income to calculate the Earned Income Credit (EIC) or Additional Child Tax Credit (ACTC) on your 2020 tax return if doing so makes the credit larger. This will help you get a larger credit amount if your income was reduced in 2020 due to unemployment or other reasons.
Follow these steps to see if recalculating your earned income credit using your 2019 earned income would benefit you.
Note: Your return should be complete before you go through this comparison process. If you add income or dependents after doing the comparison, the results can change.
- Open (continue) your return if you don't already have it open.
- Take note of your current refund or payment due amount. (Your return should include all your information before starting this comparison.)
- Search for EIC and select the Jump to link at the top of the search results.
- Answer Yes on the Did my earned income decrease in 2020? screen and Continue.
- Answer the onscreen interview questions until you get to the Do you want to use last year's earned income? screen.
- Answer Yes and enter your 2019 earned income from last year's tax return to determine how much you will receive.
- Compare the new refund (or payment due) amount using your 2019 earned income with the previously noted refund or payment due amount using your 2020 earned income.
- Continue with the onscreen interview questions until complete.