How to Use Previous Year Earned Income to Work Out EIC and CTC?
Taxpayers who were unfortunate to lose their jobs or experience a change in their earnings in 2020 have been given authority by the Consolidated Appropriations Act of 2021, to calculate their Earned Income Credit or Additional Child Tax Credit using their Earned Income for 2019 in place of their 2020 tax return on condition that their 2019 earned income exceeded that of 2020.
The steps below guide on how a taxpayer can use their 2019 earned income in place of their 2020 tax return to calculate their EIC and CTC:
- Go to the main menu of the tax return
- Proceed to Basis Information
- Select Personal Information
- Choose the option which lets you use your 2019 earned income to calculate your 2020 earned income and/or CTC.
- In the field provided, dial in the taxpayer’s 2019 earned income amount. You can find the 2019 tax return either by looking at EIC Worksheet A, line 1, EIC Worksheet B, line 4b, or Schedule 8812, line 6a.
The program automatically determines and utilizes the amount that results from the calculation of the EIC and CTC of the previous year’s earned income and the present year’s earned income amount in getting the larger credit.
For additional information: