Earned Income Credit & Child Care Credit

[kramer982]

It is my understanding for the 2020 and 2021 tax years, you can use either your 2019 income or your 2020/2021 income to calculate both the EIC and the Child Tax Credit.  

1. Is it correct that this option is for for both 2020 and 2021?

2. If so, is it one or the other or could you use 2019 both for 2020 and 2021 if was most beneficial.

Thank you.

[MinhT1 · Accepted solution]

The lookback rule is part of the Coronavirus tax relief package.

The lookback rule applies for tax year 2020 to both the Earned Income credit and the refundable part of the Child tax credit.

It has not been extended for tax year 2021.

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.

Please read this TurboTax blog for more information.