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. To enter a taxpayer's 2019 earned income in their 2020 tax return, from the main menu of the tax return select:
- Personal Information
- Other Categories
- COVID/Disaster & Electing to Use PY Earned Income
- Select Yes and enter the taxpayer's 2019 earned income amount in the space provided. 2019 earned income can be found in the 2019 tax return by viewing EIC Worksheet A, line 1, EIC Worksheet B, line 4b, or Schedule 8812, line 6a.
The program will calculate the Earned Income Credit and Child Tax Credit using both the prior year earned income amount and the current year earned income amount and will automatically determine and use the amount that results in the larger credit.