Q. EIC/ EITC (are they different ?)
A. It's just one thing with two ways of saying it: Earned Income Credit or Earned Income Tax Credit
Q. I thought the student’s unemployment benefits of 31,000 might be causing the EIC to only be 900$?
A. No. The dependent's income is irrelevant to the EIC on your tax return. What is relevant is that you must claim the dependent to get any EIC in 2020, whether you use 2020 or 2019 income.
Q. I am not sure if I am understanding the look back rule correctly.
A. Your income is too high to use the look back rule. The basic EIC works on a "bell curve," rising as a worker's wages rise reaching a maximum when annual earnings are between about $10,000 and $19,000 (Married with 1 child) and then declining gradually until it phases out altogether. If your income is on the up slope of the EIC curve more earned income will increase your EIC but if your income is on the down slope, more income (of any kind) will reduce you EIC. You're on the downslope. See the curve (graph) at:
http://www.taxpolicycenter.org/briefing-book/key-elements/family/eitc.cfm
Q. Would that allow the student to claim EIC/ EITC since their 2019’s income was around 1,300 and none in 2020?
A. No. People, under 25, without kids, are not eligible for EIC.
Q. How will this look back rule affect whether claiming the student will save more or not?
A. Not at all, even if you were on the up slope of the EIC curve. There is little or no EIC without a qualifying child dependent
Q. Is the unemployment exclusion of around $10,200 still effective on the student’s unemployment benefits if the student is claimed as dependent?
A. Yes. He gets it either way
Q. What happens if the dependent box mark on the student’s return is forgotten to be marked? Would that affect anything? One being able to claim AOT? Another being that kiddie tax won’t apply anymore?
A. If he qualifies as a dependent and doesn't check the box, he'll be committing of tax fraud. If he does not qualify as a dependent (or if you forego claiming him) he can still only claim the non-refundable portion of the AOC ($1500 max) because of a special rule for full time students under 24. The kiddie tax is still applicable, regardless of dependency (another full time students under 24 special rule).
