State EITC after Relocation (Using 2019 Federal Income)

[lua21292]

Hi All,

Hoping maybe someone might have some insight. ?

Last year and this year (for tax year 2021) an IRS rule is enabled that allows you to utilize your income from 2019 to calculate the EITC credit, if your income in 2019 was higher, offering a larger credit.

Each individual state EITC is a percentage of the federal credit.

I moved to a new state in 2020. I filed a state return, which automatically calculated the state EITC as 30% of the credit from the federal return. It was disallowed.

I was sent all kinds of forms requesting business income, self employment income, a list of all employment not claimed, Schedule C, you name it. They wanted to know why I was claiming income from a state I did not work in, I am assuming? I sent them a letter detailing that the state EITC was calculated using a percentage of the federal credit from 2019, there was no "missing income", etc. They responded that I was not willing to provide the income and the credit was disallowed. Awesome. Lol

Same thing this year. Software calculates a state EITC based on federal 2019 return. Am I just out of luck here?

Any help or ideas are appreciated, thanks!

[RaifH]

Can you clarify which state you moved to in 2020? Not every state followed the federal look back rule that allows you to use 2019 income to claim the state EITC.

[lua21292]

Thank you for your response!

I moved from NJ to MA.

Again, thank you so very much.

[RaifH · Accepted solution]

In your letter, did you include copies of your 2019 W-2s, 1099s, etc? Since you did not file with MA in 2019, they did not have access to this information. Looking at their eligibility information, I do not see anything that requires the income to be earned in MA, as long as the year you are claiming the credit you are a resident of MA. And you are correct, they are following the same lookback provision of the IRS. I would try it again in 2021 if you do have those records for 2019 and be prepared to send them. 

If you want to play it safe, you could use your 2021 income if your federal and MA EITC using 2021 income are greater than just your federal EITC using 2019. 

[lua21292]

Oh, my goodness.

I didn't realize that is what they were looking for, a copy of my 2019 return. That would have been so EASY!

The puzzle piece!

I can't thank you enough- is it now possible (with documentation from 2019) to amend last year's return and receive my refund from last year as well?

You've made my day. Really.

[HelenC12]

Yes, you may amend tax year 2020 if the special look back applies to you. The special look back is for taxpayers who have less earned income in 2020 versus 2019 not for taxpayers who earn more in 2020 than they did in 2019.

• Per IRS: 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.