They passed a bill stating you can use your 2019 income for the Earned Income Tax Credit instead of 2020's income. How do I go about doing it when filing?

[cnb3341]

The COVID relief bill passed in December had a few tax related items, including: Temporary special rule for determination of earned income: The bill allows taxpayers to refer to earned income from the immediately preceding tax year for purposes of determining the Sec. 32 earned income tax credit and the Sec. 24(d) additional child tax credit for tax year 2020.

How do I go about doing this when filing? The site doesn't appear to give an option.

Thank you.

[ColeenD3]

Yes you can use 2019 earned income instead of 2020 income to compute the Earned Income Credit.

To do this in TurboTax:

• In Search, type earned income credit,
• Click Jump to earned income credit,
• Answer the questions until you reach Do you want to use last year’s earned income?
• Click Yes and enter your 2019 Earned Income.

If your earned income was higher in 2019 than in 2020, you may get a higher EITC credit by using 2019 earned income. Try it both ways in TurboTax and see what works best for you.

[cnb3341]

I already filled it out. when I click revisit, it just gives me the page saying I don't qualify, I'm not given the option to use last years. I was able to claim the credit last year.

[cnb3341]

Bump....

[VolvoGirl]

Did you already submit and file it?

The special lookback rule will allow lower income individuals to use their earned income from 2019 to determine their Earned Income Tax Credit and the refundable portion of the Child Tax Credit in 2020, since their lower 2020 income could reduce the amount they are eligible for.

You can look back and use your 2019 income for the EIC credit instead of 2020.  See this post  https://ttlc.intuit.com/community/taxes/discussion/i-m-at-a-section-asking-me-do-you-want-to-use-las...

[StratigosA08]

An important clarification from IRS Pub 596, Page 18, states:

Election to use prior year earned income. "You can
elect to use your 2019 earned income to figure your 2020
earned income credit (EIC) if your 2019 earned income is
more than your 2020 earned income. "

SO, if your 2020 earned income is too high for the EITC, then necessarily you will not be able to use your 2019 Earned income amount since it MUST be greater than 2020 to be an option. In other words, this provision only allows EITC eligible taxpayers to receive more of an earned income credit if their prior year income results in a greater credit. It does not give you a second chance to be eligible for it based on last years income. 

So for those customers who see "you are not eligible" it is a moot point because a higher amount from a prior year will not help you.

[DawnC]

Correct.  The new EITC rule will help people whose income was less in 2020 than 2019 or who received unemployment income that cannot be used to qualify for the EITC. A person may elect to use their 2019 earned income to figure the Earned Income Tax Credit if their earned income was more in 2019 than in 2020. This change may help workers get bigger tax credits and larger refunds when they file their 2020 tax returns this year. Taxpayers should use their 2019 earned income if it helps them qualify for more EITC.

And you can't use last year's AGI amount to figure the credit, only the earned income amount.   @StratigosA08