The taxpayer will receive Earned Income Tax Credit (EITC) and the refundable portion of the Child Tax Credit (CTC) based on 2019 earned income if it’s greater than the EITC and CTC based on 2020 earned income.
If it appears that the taxpayer meets these requirements based on the amounts on Line 1 (wages) and Schedule 1 Line 3 (business income) of the 2019 return, you must review the return and determine the amount of earned income eligible for the credit. Do not use the amounts from these lines as there may be income included in these lines that is not earned income. See below.
1. Earned income = Line 1 adjusted amount plus Schedule 1 Line 3 adjusted amount
2. Line 1 income - Reduce amount by:
3. Schedule 1 Line 3 income – Reduce amount by:
4. Schedule 1 Line 14 – Deductible part of self-employment tax
Note: See EITC Worksheet B in the 1040 instructions in the following cases:
Once 2019 earned income is determined and if it’s greater than 2020 earned income (shown on 2020 EITC Worksheet A or B – use QR print set or View/Print from the Summary/Print page to see the worksheets):
TaxSlayer will calculate best EITC and CTC based on either prior year earned income or current year earned income. If prior year earned income is used, PYEI and the amount will print on Form 1040.