Use whichever provides biggest tax break.
“Lookback” rule lets you use 2019 income on two credits for 2020 taxes. Taxpayers who claim the Earned Income Credit (EIC) and Additional Child Tax Credit (ACTC) received some good news recently. ... stimulus bill lets you continue to claim these valuable credits–even if your income changed in 2020.
This is a very important provision which has the potential to help workers who experienced lower income in 2020, or received unemployment income in lieu of their regular wages, get bigger tax credits and larger refunds in the coming year.
The special lookback rule will allow lower income individuals to use their earned income from 2019 to determine their Earned Income Tax Credit and the refundable portion of the Child Tax Credit in 2020, since their lower 2020 income could reduce the amount they are eligible for.
The Earned Income Tax Credit is the country’s largest program for working people with low to moderate income. More than 25 million eligible tax filers received federal Earned Income Tax Credit last tax season and the average Earned Income Tax Credit was $2,476 per filer.
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