EARNED INCOME TAX CREDIT CALCULATION

[OzNY]

The earned income tax credit worksheet states 2019 earned income to calculate a higher amount, but it automatically transfers over the 2020 amount.  It does allow you to manually put in the 2019.

I have looked all over and cannot find the scenario that best describes my clients situation.  If the taxpayer used the 2019 income on the 2020 tax return to calculate the eitc, can it be used again for tax year 2021.

[TaxGuyBill]

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@OzNY wrote:

but it automatically transfers over the 2020 amount. 

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I am hoping it doesn't do that.  It is not allowed to use the 2020 amount.

Yes, if 2019 Earned Income was higher [edited] than 2021 Earned Income, you can use the 2019 Earned Income for the Earned Income Credit.  It does not matter if what you did in 2020.

[Terry53029]

Bill, I think it is the other way around. 2019 income must be higher than 2021 in order to use 2019 income instead of 2021 income. From irs.gov link: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-and-earned...

Election to use prior-year earned income
You can elect to use your 2019 earned income to figure your 2021 earned income credit (EIC) if your 2019 earned income is more than your 2021 earned income.

[OzNY]

I had 1 question and one concern.  When I accessed the eic worksheet to indicate that I wanted to use the 2019 income to get the credit for ty2021, the 2020 income was pre-populated on the line for 2019 income, but you were able to change the amount.  I think it's a little confusing and errors can easily be made.

My question was if we can use the 2019 income a second time to calculate the EIC, if the 2019 income was used to calculate the EIC for ty2020.  Anything I read; just send you can use 2019 income to calculate the credit and did not say that you can only use it once.

[Terry53029]

Doesn't matter what client did in 2020. The rule for 2021 is if 2019 income higher than 2021, then you can use 2019 income. I haven't done any eic this year, but thanks for pointing out the flaw in program  

[TaxGuyBill]

Yep, I typed that wrong.  Thanks for pointing that out.  I'll correct it above.