Unemployment and the lookback provision

[Jessmore]

If someone only has unemployment for the tax year can they still use the lookback provision or do they have to have some earned income?

[HelenC12 · Accepted solution]

Unemployment does not qualify. Only earned income applies for the special look back provision for taxpayers in 2020 . It may be better for some taxpayers to use their 2019 earned income to calculate their EIC which may get them a higher refund or a lower amount due versus using their 2020 earned income. 

• Per IRS: This temporary relief is provided through the Taxpayer Certainty and Disaster Tax Relief Act of 2020. 

To access the Earned Income Credit special look back provision, see the steps below.

 Type EIC in the search and select the Jump to.

1. Continue with the onscreen interview until you get to the Do you want to use last year's earned income? screen.
2. Continue with the onscreen interview until complete. 

To qualify for and claim the Earned Income Credit you must:

• Have earned income; and
• Have been a U.S. citizen or resident alien for the entire tax year; and
• Have a valid Social Security number (not an ITIN) for yourself, your spouse (if filing jointly), and any qualifying children on your return; and
• Not have investment income exceeding $3,650; and
• Not be filing a Form 2555 or 2555-EZ; and
• File a return with the Single, Married Filing Jointly, Head of Household, or Qualifying Widower filing status, even if you're not required to file a return.

In addition, both your 2020 earned income and 2020 Adjusted Gross Income (AGI) may not exceed:

• $15,820 if you're not claiming a qualifying child ($21,710 if filing jointly);
• $41,756 if you're claiming 1 qualifying child ($47,646 if filing jointly);
• $47,440 if you're claiming 2 qualifying children ($53,330 if filing jointly);
• $50,954 if you're claiming 3+ qualifying children ($56,844 if filing jointly).

One more thing — if you're not claiming a qualifying child:

• You (or your jointly filing spouse) must have been born on or after January 1, 1956; and
• You (or your jointly filing spouse) must have been born on or before December 31, 1995; and
• You (and your jointly filing spouse) cannot be claimed as a qualifying child or dependent on anyone else's return.

[Jessmore]

Thanks

[Big muddy]

So if I use the provision, last’s yrs earned income will be used in place of this years?? Or added to my unemployment earnings this year???

[ThomasM125]

Last year's earned income will be used in place of this year's. The idea is to not penalize you for a drop in your earned income this year because of Covid.