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

[NArn002]

Hi, I am actually trying to get clarification on my question, hopefully not adding confusion for others. I did just find something on IRS website that clearly states you can use 2019 earned income to determine the tax credit.  It would be helpful if it stated, "even if earned income was zero in 2021".   I was concerned about the fact that earned income is required, but this below does clearly state that one is replacing current year with prior year for this purpose.  

I do not about applying this to both years, but it seems reasonable and would make sense as to the purpose of the Act.   

Election to use prior-year earned income
You can elect to use your 2019 earned income to figure your 2021 earned income credit (EIC) if your 2019 earned income is more than your 2021 earned income. Earned Income and Earned Income Tax Credit (EITC) Tables | Internal Revenue Service (irs.gov)

[NArn002]

Hi, this is a bit concerning to see differing responses, as well as the software appearing to show that even with zero earned income in 2021, it is "ok" to claim the credit.  This actually shows on the screen as a choice as to which year to apply.   I read that the penalties for incorrectly completing this can include a disallowed use of the credit for up to 10 years.  This makes me a bit nervous as to whether the Turbo Tax return, with a credit showing on the forms, is accurate or a problem.  Keep in mind, I am following instructions in Turbo Tax. 

[DoninGA]

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@NArn002 wrote:

Hi, this is a bit concerning to see differing responses, as well as the software appearing to show that even with zero earned income in 2021, it is "ok" to claim the credit.  This actually shows on the screen as a choice as to which year to apply.   I read that the penalties for incorrectly completing this can include a disallowed use of the credit for up to 10 years.  This makes me a bit nervous as to whether the Turbo Tax return, with a credit showing on the forms, is accurate or a problem.  Keep in mind, I am following instructions in Turbo Tax. 

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IRS Publication 596 Earned Income Credit (EIC) page 20 - https://www.irs.gov/pub/irs-pdf/p596.pdf#page=20

Election to use prior-year earned income. You can elect to use your 2019 earned income to figure your 2021 earned income credit (EIC) if your 2019 earned income is more than your 2021 earned income. To make this election, enter the amount of your 2019 earned income on Form 1040 or 1040-SR, line 27c.

If you file a joint return and make the election, your 2019 earned income is the sum of your 2019 earned income and your spouse's 2019 earned income.

[DawnC]

The Earned Income Credit looks at 2 numbers as well as the number of qualifying children you have.   Both your Adjusted Gross Income (AGI) and your Earned Income are factored in.   The lookback provision applied to the Earned Income part, but not the Adjusted Gross Income part.   Any reference to AGI will use your 2021 AGI.    Even if you technically qualify for the EITC, it will be $0 if you have no earned income (unemployment is not earned income).    But because of the lookback rule, you can have $0 earned income in 2021 but use your 2019 earned income (not $0) to qualify for a bigger credit.   

If you follow the instructions in TurboTax and you get a larger credit using the lookback, you can rest assured you will not be disqualified from taking the credit in the future.   TurboTax is following the IRS and applying the federal tax code.  

@NArn002   @Kfrank55

[Kfrank55]

Haha im sorry i still dont understand. So in my case i had $0 earned income in 2021. Only unemployment which you stated does NOT go towards earned income. So i guess the final question is am I eligible ? I have 1 dependent also if that matters. Single. Very simple return. 

And ill mention again for last years taxes i had the same exact return as this year. Unemployment. No EIC. 1 dependent and single. 

[NArn002]

Thank you, Dawn, that helps. In this case, it looks like 2019 is applicable. 

[t231]

@DawnC So if you have earned income in 2019 and ZERO earned income in 2021 (only unemployment) then you are NOT able to claim EIC. Is that correct? 

I am single, no children. 

Also do the same rules apply for NY state?

[ErnieS0]

No. You can use your 2019 earned income to figure your 2021 earned income credit (EIC) if your 2019 earned income is more than your 2021 earned income @t231.

You can have $0 income in 2021 and get EIC based on your 2021 earned income if you quailfy.

Earned Income Tax Credit (EITC)

[ellesborough]

how can i amend my return for calendar 2020 because i don't my earned income tax credit

[ellesborough]

i don't earned income tax credit for calendar 2019 income tax return

[ThomasM125]

You can file an amended return using TurboTax for no additional fee. You will see the option on your Home Page in TurboTax, then under Your tax returns and documents, look for an option to Amend/Change your return. You should wait until you receive your refund or the IRS has processed your return, if you sent a payment, before you amend your tax return.
@ellesborough

[bj1069]

can I use 2019 income for eic even if 2021income is too high to qualify?

[KrisD15]

No, the option to use 2019 income is if the 2019 income is more. 

@bj1069 

[kschliebe]

TurboTax says you can take the EITC for 2019 but the IRS says "no" cannot. Unemployment Comp for 2021 isn't considered income which according to TurboTax IS less than income in 2019.  What's the correct answer? How do you fight IRS?

[DoninGA]

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@kschliebe wrote:

TurboTax says you can take the EITC for 2019 but the IRS says "no" cannot. Unemployment Comp for 2021 isn't considered income which according to TurboTax IS less than income in 2019.  What's the correct answer? How do you fight IRS?

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Who told you that you cannot use 2019 earned income for EITC if your 2021 earned income is less?  An IRS agent?

Go to this IRS website for information on using 2019 earned income for 2021 EITC if the 2019 earned income is more than 2021 - https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-and-earned...