3 kids, 2020 income lower than 2019 - TT switched to 2019 income to calculate EIC

[bshad74]

but the number as 2019 earned income pulled automatically into 2020 return is some number that I do not recognize being the EI for 2019 - even though I have looked as per the instruction "where to look for 2019 EI".

Hypothetically:

w2 income - 130000

Schedule 1 deductions - 26000

Taxable income - 104000 (AGI)

Standard deduction - 24000

Taxable income - 80000 (is this the EI) - if it is, why TT is putting say 95000 in 2020 tax return as EI from 2019?

Am I missing something?

[AmyC]

Yes, earned income is money that was earned rather than investments. Which looks like it would be $130,000 from your example but your schedule 1 losses may include income that was being worked for- at a loss, to bring you down to $95k.

[TXDAD]

Okay but how is 95k calculated? Schedule 1 losses only bring 130000 to 104k.  

[AmyC]

@TXDAD Don't confuse the form total with all the moving pieces inside of it.

sch 1 is comprised of many different items. There could $90,000 in losses from one thing and $20,000 in gains for something else and so on. There are so many parts and pieces, it would be easy to have the loss from active income on sch 1 affecting EIC while other passive activities are changing sch 1.

[TXDAD]

I guess I am going to leave the default number TT is pulling. Regardless of what number I put there, the outcome never changes i.e. the refund doesn't change.  Thank