Under the Consolidated Appropriations Act of 2021, taxpayers who experienced a job loss or change in their income in 2020 can elect to use their 2019 earned income to calculate the Earned Income Credit and/or Additional Child Tax Credit on their 2020 tax return if their 2019 earned income was more than their 2020 earned income. In 2021, Congress extended the ability to use the 2019 earned income in these calculations for tax year 2021.
To enter a taxpayer's 2019 earned income in their 2020 or 2021 tax return in TaxSlayer Pro, from the Main Menu of the tax return (Form 1040) select:
- Personal Information
- Other Categories
- 2019: COVID/Disaster & Electing to Use PY Earned Income
2020: Electing to Use 2019 Earned Income - Select Yes and enter the taxpayer's 2019 earned income in the space provided. 2019 earned income can be found in the 2019 tax return in three places:
- EIC Worksheet A, line 1
- EIC Worksheet B, line 4b
- Schedule 8812, line 6a
TaxSlayer Pro will calculate the Earned Income Credit and the Child Tax Credit using both the prior year earned income and the current year earned income and will use the amount that results in the larger credit.
Additional Information:
IRS: 2020 Schedule 8812 instructions
IRS: 2019 Schedule 8812 instructions
IRS: 2020 Publication 596 - Earned Income Credit (EIC)
IRS: 2019 Publication 596 - Earned Income Credit (EIC)