Why is my federal return saying I can't e-file because my "Earned Income Tax Credit is based on non-documented earned income"?

[blkelsey90]

I selected to use my 2019 income info and did not enter this into the W-2 section for 2020.

[ErnieS0]

Some TurboTax Online customers are getting the error below when attempting to filing for Earned Income Credit (EITC) using 2019 income amount.

We Won't Be Able to Efile Your Return:

Your Earned Income Tax Credit (EITC) is based on non-documented earned income.

If you are experiencing this issue, please sign up here for email updates as we are working on the issue.

[blkelsey90]

Is this a TurboTax issue? Any idea when it’ll be fixed?

[RayW7]

Basic Qualifying Rules

To qualify for the EITC, you must:

• Show proof of earned income
• Have investment income below $3,650 in the tax year you claim the credit
• Have a valid Social Security number
• Claim a certain filing status 
• Be a U.S. citizen or a resident alien all year

Earned income includes all the taxable income and wages you get from working for someone else, yourself or from a business or farm you own.

Types of Earned Income

• Wages, salary or tips where federal income taxes are withheld on Form W-2, box 1
• Income from a job where your employer didn’t withhold tax (such as gig economy work) including:
  • Driving a car for booked rides or deliveries
  • Running errands or doing tasks
  • Selling goods online
  • Providing creative or professional services
  • Providing other temporary, on-demand or freelance work
• Money made from self-employment, including if you:
  • Own or operate a business or farm
  • Are a minister or member of a religious order
  • Are a statutory employee and have income
• Benefits from a union strike
• Certain disability benefits you got before you were the minimum retirement age
• Nontaxable Combat Pay (Form W-2, box 12 with code Q)
  • If you claim nontaxable combat pay as earned income, it may increase or decrease the amount of your EITC. For more information, see Publication 3, Armed Forces Tax Guide.

Earned income does not include:

• Pay you got for work when you were an inmate in a penal institution
• Interest and dividends
• Pensions or annuities
• Social Security
• Unemployment benefits
• Alimony
• Child support

Note: 

If your earned income was higher in 2019 than in 2020, you can use the 2019 amount to figure your EITC for 2020. This temporary relief is provided through the Taxpayer Certainty and Disaster Tax Relief Act of 2020.

To figure the credit, see Publication 596, Earned Income Credit.

[Jessie b]

Can u claim the eitc with your 2019 income if u only have unemployment in 2020

[DawnC]

Yes.  Your earned income from 2019 may help you with your 2020 taxes.   You may recalculate your earned income credit using your 2019 income if your 2020 earned income was less than your 2019 earned income (including non-taxable combat pay).   It is optional, but if it gets you a larger credit using the 2019 income, do it.    @Jessie b

[Jessie b]

So even if I had no earned income in 2020 only unemployment, I can still use my 2019 earned income for the eitc?

[JohnW152]

That’s right. 

You can make this election if your 2019 earned income was greater than your 2020 earned income, since lower 2020 income could reduce the amount they are eligible for. 

Please see Special Lookback for Earned Income Tax Credit and the Child Tax Credit in TurboTax's New Coronavirus Relief Package: What Does it Mean for You and a Second Stimulus Check blog for more information.

To use the lookback feature for the Earned Income Tax credit in TurboTax Online, go to the Earned Income tax credit section.

1. In the Search box on the top right of your screen, enter earned income tax credit and click on Find at the right
2. In the search result box, click on Jump to earned income tax credit
3. In this section, follow the interview until you arrive at a page titled Do you want to use last year's earned income? Note down your Earned Income tax credit using your 2020 earned income.

1. Click on the radio button Yes and enter your 2019 earned income and click Continue
2. TurboTax will give you your new Earned Income tax credit using your 2019 earned income
3. If the new credit is higher, click Continue to accept it
4. If the new credit is lower, click Back to go back to the previous screen and click the radio button No then click Continue.

[Jessie b]

I'm getting the same " eitc is based on non documented earned income" message. It says they r trying to resolve the issue......should I wait to efile or mail it in?

[jordylsdad22]

Hi if it helps I got the same message , I spoke with someone at Turbo Tax by phone and he said it's a software issue that he had alot of calls on it today and told me to try in a couple days again. He said to start over and enter my info in  and see if it's fixed  by then. Again hope it helps good luck 

[Dkarena]

Your answers include language about earned income but the questioners are stating they only received unemployment income -there is no earned income.  Are they still able to use the lookback if there is no "earned" income. 

[Jessie b]

Yes, if u only received unemployment for 2020 and u had earned income in 2019 you can use the "lookback" for your 2020 taxes

[ReneeM7122]

Yes, if you had unemployment income (not "earned" income) in 2020, you can avoid losing the Earned Income Tax Credit by using the "lookback" rule.  This means that you can look back to your 2019 income instead.  The idea behind it is that due to COVID19, people who lost their jobs or became unemployed in 2020 would lose the credit or get a reduction to what they would normally be entitled.  That could also mean the difference between a refund or even owing taxes.  Being able to look back to 2019 can help avoid that problem.

Here is a TurboTax article with more information about the Earned Income Tax Credit.

@Dkarena