The new EITC rule will help people whose income was less in 2020 than 2019 or who received unemployment income that cannot be used to qualify for the EITC. A person may elect to use their 2019 earned income to figure the Earned Income Tax Credit if their earned income was more in 2019 than in 2020. This change may help workers get bigger tax credits and larger refunds when they file their 2020 tax returns this year. Taxpayers should use their 2019 earned income if it helps them qualify for more EITC.
To use the lookback feature in TurboTax Online, go to the Earned Income Tax Credit section.
- In the Search box on the top right of your screen, enter EIC or eic and hit enter; click on Jump to eic
- Follow the interview until you arrive at a page titled Do you want to use last year's earned income? make a note of the amount of your credit using the 2020 earned income...
- Click on Yes and enter your 2019 earned income and click Continue
TurboTax will show your new Earned Income tax credit using your 2019 earned income. If the new credit is higher, click Continue to accept it. If the new credit is lower, click Back to go back to the previous screen and click the radio button No then click Continue.
Generally, earned income includes wages (including non-taxable combat pay), tips, and other payments received for services you personally performed.
This usually includes the total of the amounts reported on:
- Form 1040, line 1 (Wages, salaries, and tips)
- Schedule C, line 3 of Schedule 1 (net business income)
- Schedule F, line 6 of Schedule 1 (net farm income)
For more info on this provision, see Special Lookback for Earned Income Tax Credit and the Child Tax Credit @vanessanight90
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