Note: This article's content applies to 2021 tax returns only.
The American Rescue Plan of 2021 has a “lookback” provision that allows you to use your 2019 earned income instead of your 2021 earned income to calculate the Earned Income Credit (EIC) or Additional Child Tax Credit (ACTC) on your 2021 tax return if doing so makes the credit larger. This will help you get a larger credit amount if your income was reduced in 2021 due to unemployment or other reasons.
Follow these steps to see if recalculating your earned income credit using your 2019 earned income would benefit you.
Note: Your return should be complete before you go through this comparison process. If you add income or dependents after doing the comparison, the results can change.
- Open (continue) your return if you don't already have it open
- Take note of your current refund or payment due amount. (Your return should include all your information before starting this comparison)
- Search for earned income credit and select the Jump to link at the top of the search results
- Answer Yes to Do you want to check if your 2019 income will increase your EITC? screen and enter your 2019 earned income, then Continue
- If you qualify, compare the new refund (or payment due) amount using your 2019 earned income with the previously noted refund or payment due amount using your 2021 earned income
- Continue with the onscreen interview questions until complete