Earned Income Tax Credit Relief For 2020

The COVID-19 pandemic has triggered a severe economic crisis whose fallout will likely persist for some time. The new Covid-19 relief package provides a “lookback adjustment” for both the Child Tax Credit and the Earned Income Tax Credit. Since many taxpayers may have lost income in 2020, that may have reduced the number of credits they are eligible for when they file taxes in the spring.

Both tax credits phase in as taxpayers earn more income. Since many taxpayers may have

lost income in 2020, that may have reduced the number of credits they are eligible for when they file taxes in the spring.

The lookback rule will help taxpayers prevent this loss of tax credit by allowing 2019 income to be used to determine an individual’s credit eligibility for the 2020 tax year.

In addition, specifically for the EITC, 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.