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Was your 2020 income affected by job loss? Here’s how to determine if you can claim EITC

Posted on February 15, 2021

The earned income tax credit (EITC) was set up to give qualifying workers with low-to-moderate income a substantial financial boost.

In 2019, the average amount of this credit was $2,476. It not only reduces the amount of tax owed, but may give qualifying individuals a refund even if they don’t owe any taxes (or aren’t required to file a return).

Are you eligible?

A taxpayer’s eligibility for the EITC credit may change from year to year, so it’s a good idea for people to go to IRS.gov and check the EITC Assistant to find out if they qualified in 2020.

Eligibility can be affected by major life changes such as:

  • New job or loss of a job
  • Unemployment benefits
  • Change in income
  • Change in marital status
  • Birth (or death) of a child
  • Change in spouse’s employment situation.

Taxpayers qualify based on their income and the filing status they use on their 2020 tax return. The EITC credit can be more if they have one or more children who live with them for more than half the year and/or meet other requirements.

 New 2020 return guidelines

There’s a new rule to help people impacted by a job loss or change in income in 2020. Taxpayers can now use their 2019 earned income to figure their EITC if their 2019 earned income was more than it was in 2020.

The same holds true for the additional child tax credit. For details, talk to your Teipen Group CPA or go to IRS.gov under instructions for Form 1040.

2020 Maximum EITC credit amounts

This year’s maximum credit amounts are based on whether the taxpayer can claim a child for the credit and the number of children claimed:

  • Zero children: $538
  • One child: $3,584
  • Two children: $5,920
  • Three or more children: $6,660

2020 EITC income limits are as follows:

Married filing jointly:

  • No children: $21,710
  • One child: $47,646
  • Two children: $53,330
  • Three or more children: $56,844

Head of household and single:

  • No children: $15,820
  • One child: $41,756
  • Two children: $47,440
  • Three or more children: $50,954

Teipen Group CPA can help you make sense of EITC, especially if your work income or home situation has changed dramatically in the past year. We’re here to help and answer your questions. Always.