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amberdibble
New Member

I got to eic and my dependent question and this came up You may benefit from recalculating your eic using your 2019 income. Do i only do this if I didn't claim it in 2019

This is the exact message You may benefit from recalculating your earned income Credit using your 2019 earned income (including non-taxable combat pay) if it is greater than your 2020 earned income.
3 Replies
NCperson
Level 15

I got to eic and my dependent question and this came up You may benefit from recalculating your eic using your 2019 income. Do i only do this if I didn't claim it in 2019

that is new and was signed into law as part of the COVID relief tax passed two weeks ago....if 2019 gets you a larger credit, you are allowed to use 2019 income for these credits...just follow the TT questions as they are asked 

Opus 17
Level 15

I got to eic and my dependent question and this came up You may benefit from recalculating your eic using your 2019 income. Do i only do this if I didn't claim it in 2019

You may use this provision even if you got EIC in 2019. 

 

Because EIC is based on income, some people who lost work would also get lower EIC this year.  The COVID relief bill gives you the option of calculating EIC based on your 2019 income in case that gets you a bigger EIC payment than your 2020 income. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Hal_Al
Level 15

I got to eic and my dependent question and this came up You may benefit from recalculating your eic using your 2019 income. Do i only do this if I didn't claim it in 2019

The basic EIC works on a "bell curve," rising as a worker's wages rise reaching a maximum when annual earnings are between $14,800 and $19,350 (Single with 2 or 3 children 2020) 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.  For those people having less income in 2020 also results in less EIC. This provision will help them.

 

But if your income is on the down slope, more income (of any kind) will reduce you EIC.  So you would not want to use the 2019 option.

 

See the curve (graph) at:

http://www.taxpolicycenter.org/briefing-book/key-elements/family/eitc.cfm

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