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amysweat2
New Member

What’s the difference between using last year’s income or this year’s income for 2020 taxes

 
4 Replies
xmasbaby0
Level 15

What’s the difference between using last year’s income or this year’s income for 2020 taxes

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.
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
amysweat2
New Member

What’s the difference between using last year’s income or this year’s income for 2020 taxes

Okay but what if my refund is less because my child turned 17 

amysweat2
New Member

What’s the difference between using last year’s income or this year’s income for 2020 taxes

OK but what if my refund is less this year because I have a child that turns 17? Can I still use last year’s income?

xmasbaby0
Level 15

What’s the difference between using last year’s income or this year’s income for 2020 taxes

You cannot get the child tax credit on a 2020 return for a child who does not qualify to get it.  You lose the CTC in the year the child turns 17.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
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