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Common questions about Schedule EIC in ProSeries

by Intuit•7• Updated 4 months ago

What should I check in ProSeries if EIC is not calculating?

Earned Income Credit (EIC) is calculated based on the entries made throughout the program. If the return does not qualify for EIC, page 2 of the EIC Worksheet will list what disqualified the credit.

How can I suspend the EIC calculation?

The easiest way to suspend the calculation of EIC:

  1. Open the Federal Information Worksheet.
  2. Scroll down to Part IV- Earned Income Credit Information.
  3. Check the box Taxpayer notified by IRS that EIC cannot be claimed in 20YY.

This will suspend the calculation of EIC without causing any other forms or worksheets to generate.

Medicaid waiver payments for in-home support services are excludable from gross income and shouldn't be included in earned income.

If these payments are reported in box 1 of Form W-2, try to get a corrected Form W-2 from the payer first. If a corrected Form W-2 can't be obtained, follow one of these two steps:

Don't include this W-2 in the return. The IRS may contact the taxpayer to explain why the payments weren't included on the tax return. The taxpayer can explain that the payments are excludable from gross income under Notice 2014-7 as payments for in-home support services.

If the Form W-2 has federal or state taxes withheld, enter these amounts on the Tax Payments Worksheet under line 18 as Other Withholding.

For more information, refer to the following IRS webpages:

In order for a dependent to qualify for EIC, they must be a qualifying child. This isn't the same requirement as the qualifying relative to be claimed as a dependent. A qualifying child for the EIC is a child who is your:

  • Son
  • Daughter
  • Stepchild
  • Foster child
  • Brother
  • Sister
  • Stepbrother
  • Stepsister
  • Half brother
  • Half sister
  • A descendant of any of the above (for example, your grandchild, niece, or nephew)

AND was

  • Under age 19 at the end of the tax year being filed and younger than you (or your spouse, if filing jointly)
  • Or under age 24 at the end of the tax year, a student, and younger than you (or your spouse, if filing jointly)
  • Or any age and permanently and totally disabled

AND

  • Who is not filing a joint return for the current tax year (or is filing a joint return for the current tax year only to claim a refund of withheld income tax or estimated tax paid)

AND

  • Who lived with you in the United States for more than half of the current tax year

Using the prior year earned income amounts for tax year 2020 or 2021 returns:

Earned Income Tax Credit (EITC) Relief:
If your earned income was higher in 2019 than in 2020 or 2021, you can use the 2019 amount to figure your EITC for 2020 and 2021. This temporary relief is provided through the Taxpayer Certainty and Disaster Tax Relief Act of 2020.

To elect to use the 2019 earned income amounts in ProSeries:

  1. Press F6 to bring up Open Forms.
  2. Type EICW and select OK.
  3. Scroll down to the Prior Year Earned Income Election Smart Worksheet above line 6.
  4. On line A check Yes and review the transferred amount on line B.
    PCG_PS_EIC.png
  5. ProSeries will now use the 2019 Earned Income to calculate any Earned Income Credit amount.

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