How to calculate EITC based off the previous year’s Earned Income (COVID Response)

Note: 2020 income must be lower than 2019 income in order to take this election.

Those families that received less income in 2020 because of the pandemic will have the opportunity to calculate their current year Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) based off of last year’s earned income.

Follow the instructions below to correctly enter the previous year’s earned income amount on the current year return:

Step 1

Verify the correct amount of earned income from the previous year’s tax return (Form 1040)

Step 2

Select the Form 1040 (attached forms list) and navigate to line 27, Earned income credit (EIC)

Step 3

Complete the form underneath line 27 correctly, by marking the box and entering the previous year’s earned income in the correct field (see below)

Step 4

Done (See the image below for the difference from the image above.  The image below shows a higher EIC amount and an additional ACTC amount.

Note: 2020 income must be lower than 2019 income in order to take this election.