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Screen 38.2 Earned Income use 2019 income election automatically. Wonder if Turbo Tax does?

Level 2

Lacerte allows an election to use 2019 Earned Income for the 2020 calculation to be made on screen 38.2.  as provided in the CARES act this election can be made for the Additional Child Tax Credit and or for the Earned Income Credit.  In doing some what if calculations there are income changes that would benefit the taxpayer to chose to use 2019 income for both credits or one.  After doing a few income scenarios I developed an idea of the income changes that made sense on which selection to use.  To verify my conclusions it appears that I must run through all 3 options to see which one generates the most credit when preparing each taxpayers return.  Lacerte does not do this automatically nor does it generate a diagnostic that suggests using a different selection.   This will create more work for me and my staff in determining if we have chosen the best election. 

What occurred to me was how would someone using Turbo Tax know enough and be able to run the same 3 selections to chose the best one.  Does anyone know if Turbo Tax does these 3 calculations and comparisons automatically and then advises the taxpayer which one to select to get the biggest refund?

Lacerte could have done the calculation automatically once the 2019 earned income is entered with a little more programming but so far the program does not.  

Also, I am not sure why Lacerte does not automatically put the 2019 earned income into the 2020 program.  If this program does not have access to that amount I can only imagine how the IRS programs will have to be modified.

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3 Comments 3
Level 15

When did you do the proforma? There was another update to the 2019 program today, maybe they have corrected that in the most recent two updates in the last week.

After a few years, you will learn to very slowly do the proforma. The software is seldom right on the first go around. 

Here's wishing you many Happy Returns
Level 2

Not use the Proforma does it.  If it really did do that there would not be a need for an input field for 2019 Earned Income unless as an override and override is not indicated on the box.

Regarding the automatic calculation I was now reviewing notes from a tax conference I attended.  The instructor uses Drake Software and his hand out states. 

"To give taxpayers the largest credit possible, Drake Tax 2020 will calculate both credits, using both prior-year and current-year earned income, and automatically determine which results in the larger credit." 

Shame on Lacerte for costing more but delivering less.

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Level 2

Sorry typo.  I am not sure that the Proforma does it.

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