IRS REVISES FAQS FOR TAX YEAR 2021 EARNED INCOME TAX CREDIT:
The Internal Revenue Service has revised frequently asked questions (FAQs) for the 2021 Earned Income Tax Credit (FS-2022-30) to educate eligible taxpayers on how to properly claim the credit when they prepare and file their 2021 tax return.
The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families in the form of a credit to either reduce the taxes owed or an added payment to increase a tax refund. The amount of the credit may change if the taxpayer has children, dependents, are disabled or meet other criteria.
These FAQ’s detail what the EITC is, how it was expanded for 2021, which taxpayers are eligible, and how to claim it.
Question 15, "Can I elect to use my 2019 earned income to figure my Earned Income Tax Credit for 2021?” was revised.
A15. Yes. For 2021, eligible taxpayers can choose to figure the Earned Income Tax Credit 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. In certain instances, this option will result in a larger credit.
Taxpayers who did not file a return for tax year 2020 or 2021 or who did not claim the Earned Income Tax Credit 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 Earned Income Tax Credit using their 2019 earned income, if they are otherwise eligible to do so.
Note: Taxpayers may not use their 2020 earned income to calculate the Earned Income Tax Credit on their 2021 return.
