2021 lookback rule

[domerdoc]

That's what I would have thought also, but was informed otherwise by higher-level staff at my volunteer site.  Doesn't make any sense to get EIC if $0 income in '21 but worked in '19.  They were actually preparing returns that way.

[DianeW777]

As indicated by our awesome Tax Champ @xmasbaby0, earned income is the key to the earned income credit (EIC).  You are allowed to use the 2019 earned income if it benefits you assuming you have earned income in 2021.

• IRS Publication 596 (start with the chart on page 2)

[xmasbaby0]

https://ttlc.intuit.com/questions/1899157-what-are-the-qualifications-for-the-earned-income-credit-e...

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant

[AmeliesUncle]

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@xmasbaby0 wrote:

@domerdoc No.   If you did not WORK in 2021 and receive earned income you cannot get the EIC using the lookback rule.

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Sorry, but that is wrong.  You certainly can qualify for EIC with $0 of earned income if you use the lookback rule.

[domerdoc]

This is per the AARP National Tax Training Committee in July 2021.  Could not find any specific reference to $0 earned income in the IRS Pub 4012 used by VITA/TCE.

Using 2019 Earned Income on the 2021 Return
Who is eligible: Anyone whose earned income in 2019 was greater than their earned income in
2021 (even if 2021 earned income is zero!).

[AmyC]

Pub 596 is the EIC Pub and it says updated for 2021. It has a handy chart and rules for everyone as a starting place to follow the flowchart for eligibility.

@domerdoc

[domerdoc]

I read 596 throughout and could not find specific mention of $0 earned income. Elsewhere, the IRS site states this about EIC:

"To qualify for the EITC, people must have earned income through employment or other sources, so this option may help workers get a larger credit if they earned less in 2021"

Does this imply the taxpayer should actually be a worker and not retired?  It also doesn't specify whether the "must have earned income" refers to the current year or simply in the past.

[PattiF]

The taxpayer should actually be a worker.  This is from the IRS.

"Election to use prior-year 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."

 @domerdoc