IRS Updates Earned Income Tax Credit FAQs
The IRS recently updated its frequently asked questions (FAQs) for the 2021 Earned Income Tax Credit (EITC), adding new information about using prior tax years to calculate the credit.
The IRS revised Question 15, which addresses if taxpayers can elect to use their 2019 earned income to figure their EITC for 2021. For 2021, eligible taxpayers can choose to calculate the EITC using their 2019 earned income if it was higher than their 2021 earned income, even if they did not have any earned income in 2021.
Taxpayers who did not file a return for tax year 2020 or 2021 or who did not claim the EITC on their 2020 or 2021 return because they had no earned income in those years may file an original or amended return to claim the credit using their 2019 earned income.
The update also noted that taxpayers may not use their 2020 earned income to calculate the EITC on their 2021 return.