Can I claim the EITC this year using the lookback rule if I didn't work at all in 2020 but did in 2019?

[FastTaxGuy]

I haven't received unemployment and lost my job in 2019, but of course the pandemic threw a wrench into my job search. I just want to make sure I'm not fraudulently claiming the credit or anything.

[MaryK4 · Accepted solution]

Yes, if your earned income was higher in 2019 than in 2020, you can use the 2019 amount to figure your EITC for 2020. This temporary relief is provided through the Taxpayer Certainty and Disaster Tax Relief Act of 2020.  You are exactly the type of person this law is supposed to help.

[FastTaxGuy]

Thank you! Do you know if the lookback rule also applies to the state tax return (Maryland in my case)? Turbotax is putting my 2019 income on the earned income line on my state tax form, so I'm assuming it does. There doesn't seem to be a place on the state tax form to indicate "PYEI" like there is on the federal. Will Maryland know that that income is from 2019? 

[DMarkM1 · Accepted solution]

Maryland simply states that if a taxpayer qualifies for the Earned Income Credit (EIC) and claims it on the Federal return, they are eligible for the credit on the Maryland return.  MD is following the federal rules.  

Whatever income is on the federal qualifying lines will be used for MD.

Here is a link showing the requirements for the MD EIC.  

[FastTaxGuy]

Thank you!

[moraay10]

Does this apply if your unemployment income was higher than your 2019 earned income? I undertand that unemployment isn't considered earned income but I'm not 100% certain I can use this lookback rule.

[DawnC]

No, the lookback does not consider unemployment.  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.

Taxpayers earning $56,854 or less can see if they qualify using the EITC Assistant, available in English and Spanish. The tool helps determine eligibility, qualifying children, and estimates the amount of the EITC a person may get. If an individual doesn't qualify for the EITC, the Assistant explains why.   @moraay10

[Kfrank55]

Ok so. I just want to make sure again. Yes, i did read everything but its such a bigger credit then using my 2020 haha. 

So in 2019 i got a little unemployment and i worked a litte more then half the year. In 2020 i did not work at all and was on unemployment the entire year. 

so when the message pops up “do you want to use 2019 eitc over 2020” in my case i can absolutely do it correct ? 

@Dawn Cozart  @Dawn Christia  

again 2019 worked and collected unemployment that year

2020 did not work and collected unemployment all year. 

[DMarkM1]

Yes, if you had earned income in 2019 you can use the lookback option to claim the Earned Income Tax credit for tax year 2020. 

According to the IRS here: 

Election to use prior year earned income.

You can elect to use your 2019 earned income to figure your 2020 earned income credit (EIC) if your 2019 earned income is more than your 2020 earned income. 

[rwilliam50]

What if unemployment was included on your 2019 tax return to claim earned income credit? Can you use that figure when figuring year 2021 earned income credit?

[DMarkM1]

If you had earned income in 2019, you can use the lookback to possibly qualify for the Earned Income Tax Credit on your 2021 tax return. 

Unemployment does not count as "earned income."  Therefore unemployment pay is excluded from the computations. 

If you click the "Where do I find this income" hyperlink when going through the EITC comparison interview, you will find helpful information on finding/figuring your 2019 earned income.

You must have claimed income from a job in 2019 (W2) or self-employment to use the lookback.  Here is a link with more information on the lookback for Earned Income Tax Credit.  

Also you may find this link helpful for making the entries in TurboTax.

[NArn002]

I am looking at the responses here, for application of the same question with respect to 2021 taxes.  It sounds as though the EITC can be claimed based on 2019 income, even if 2021 income is zero.  However, the link in this response, clearly states that one must have earned income.  Does that not apply to 2021, or is it referring to income in the lookback year?

In the 2021 software the amount is applied based on questions, but if end up going back to the "income section" and move to "deductions" without opening any sections, the Credit is disappearing.  It is as though the software is saying "yes" one moment and "no" another moment.  Given the risks of incorrectly completing the form, I would like to know where exactly this can be confirmed?

[DawnC]

You still have to be within the income limits for 2021 to qualify for the credit.   If your 2021 income allows you to claim the credit, you qualify to use the lookback if your 2019 earned income will make your credit larger.    But if you have no income in 2021, you are not going to qualify for the credit, see the EIC Tables.  

The American Rescue Plan of 2021 has a “lookback” provision that allows you to use your 2019 earned income instead of your 2021 earned income to calculate the Earned Income Credit (EIC) or Additional Child Tax Credit (ACTC) on your 2021 tax return if doing so makes the credit larger. 

Taxpayers earning $57,414 or less can see if they qualify using the EITC Assistant, available in English and Spanish. The tool helps determine eligibility, qualifying children, and estimates the amount of the EITC a person may get. If an individual doesn't qualify for the EITC, the Assistant explains why. 

@NArn002

[Kfrank55]

Wait really ? So in 2020 i used it with $0 in income because i was on unemployment the whole year. Same thing for this tax season. Why was i able to use the lookback on last years tax return and not this years ? I have $0 in Earned income in 2020 AND in 2021. But last year i was able to claim it and this year im not ? Makes no sense to me. And while i was doing my taxes why wouldnt the system tell me something if it was different this year ? 

[Kfrank55]

I am googling everywhere. Looking at every site i can find … not one site says you must have EIC in 2021 in order to use 2019 lookback credit. Its saying 2020 is the same as 2021 when it comes to using this. I used it last year with only unemployment and $0 earned income. This years is the same exact thing. I already submitted my taxes so i guess we will see what happens.