Unemployment isn't supposed to count towards eitc according to the irs site,why is it being counted on turbo tax therefore knocking me out of this credit

 

Many people had lower incomes during the pandemic in 2020 due to reduced work hours, layoffs, etc.  Or they received unemployment benefits.   These factors affect how much earned income credit and additional child tax credit you can get on your 2020 tax return and affect your 2020 refund.

 

There is a “lookback” option that allows you to use your 2019 amounts for earned income credit or child tax credit.   You can choose whether to use your 2019 amount or your 2020 amount.  Choose whichever amount gives you a better tax refund for your 2020 refund.

 

You can see this and choose in the earned income credit section  in Deductions and Credits.

 

You still MUST enter all of your 2020 income into your 2020 tax return, including any unemployment you received.

 

Please follow these steps in TurboTax:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type "EIC"
3. Click on “Jump to EIC”
4. Answer the questions until you reach the screen "Do you want to use last year’s earned income?"
5. Note your current refund amount using your 2020 earned income at the top of the screen.
6. Click "Yes", enter your "2019 Earned Income" if the field is blank and click "continue".
7. Compare the new refund amount using your 2019 earned income with the previously noted refund amount using your 2020 earned income.
8. If your new refund amount is lower click "back" and then select "No" for the "Do you want to use your 2019 income to calculate this credit instead?" question.

I had this issue also. I’m clear on the process. I followed those same steps. My income for 2021 was higher than 2019, so that option didn't apply to me or maximize my EITC. I think the question is WHY is turbo tax calculating the unemployment as earned income and then reducing the EITC? When TurboTax and the IRS specifically state that UI is not considered earned income. I’d also like an answer or some guidance on this. 

Both your Earned Income and AGI have to be under the max.  Unemployment counts in your AGI.

 

You no longer have to be under 65 to get the EIC if you have no children.   Just over 19.

https://ttlc.intuit.com/community/credits-and-deductions/help/what-are-the-qualifications-for-the-earned-income-credit-eic-or-eitc/00/25603