2020 Earned Income Credit and Additional Child Tax Credit

A new rule to help taxpayers impacted by a job loss or change in income in 2020 has been added to the 1040 instructions. Taxpayers can 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 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 6, EIC Worksheet B, line 4b, or Schedule 8812, line 6a.

Earned Income Tax Credit (EITC) Relief

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

To figure the credit, see Publication 596, Earned Income Credit.

California Registered Income Tax Preparer