For tax year 2020, due to the American Rescue Plan, was the earned income tax credit based on earned income or AGI? Data shows it was based on earned income instead.

[i-shavers17]

If the EITC was based on earned income, how to file an amended tax return for 2020 to get the EITC owed to me?

[DianeW777]

It's not likely you need to amend your tax return for 2020.  TurboTax would have completed the calculations comparing earned income and adjusted gross income (AGI).  To claim the Earned Income Tax Credit (EITC), you must have what qualifies as earned income and meet certain adjusted gross income (AGI) and credit limits for the current, previous and upcoming tax years.

• Earned Income and Tables

It doesn't hurt anything to check an amendment to see if anything on your tax return changes.  Here are links to help you do an amendment to check your numbers. Be sure to have a copy of your original return so that you can compare. Read all the instructions before you begin so that TurboTax knows the original numbers and the changed numbers (if they change).

• Accessing a prior-year return
• Get My IRS Transcript
• Amending a prior-year return
• How to amend (change or correct) a return already filed?
• What is the deadline for filing an amended return? (2020 returns must be amended no later than April 15, 2024).

[i-shavers17]

I'm aware that normally, EITC is based on earned income or AGI whichever is higher. But for tax years 2020 to 2021, it appears the EITC is based on earned income only due to the American Rescue Act. I just filed an amended tax return for 2021 with a different tax preparation company, and received a higher amount for the EITC than my previous original tax return because my original tax return calculated my EITC based on my AGI not earned income. Not sure if you can answer this or not, but if I file an amended return, will TurboTax reimburse me for the fee because TurboTax software should have differentiated between earned income and AGI for 2020. My earned income was lower than my AGI. I am aware that the higher your earned income is, the higher the EITC until it reaches a certain phaseout point on the EITC table for 2020 that was published by the IRS.  For 2020, my AGI made me ineligible for the EITC but my 2020 earned income made me eligible for the EITC. I need a yes or no answer from TurboTax on if for 2020, was the EITC based on earned income or AGI because under the American Rescue Act it appears the EITC is based on earned income only, regardless if the AGI is higher or not. 

[i-shavers17]

I will be doing the amended tax return for 2020 with a different tax preparation company because TurboTax software doesn't know how to differentiate between AGI and earned income for 2020. If TurboTax software doesn't know how to differentiate between AGI and the earned income that means everyone with a similar situation as mine was understated for the EITC, meaning they were underpaid for the EITC which can trigger an audit from the IRS. 

[i-shavers17]

According to the Congressional Research Service, under the American Rescue Plan... " [Typically] calculating the EITC A taxpayer’s EITC is based on a formula that considers earned income, number of qualifying children, marital status, and adjusted gross income (AGI). Under this formula, the EITC increases in value as earned income increases up to a certain level. The EITC then remains at its maximum level over a subsequent range of earned income, before gradually decreasing in value over higher levels of [earned] income."