Question

Hi :) I’m having an issue with it telling me I can benefit from recalculating my child tax credit using my earned income from last year, and when I click yes it’s asking for non taxable comb

Forum|Forum|5 years ago
January 28, 2021
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TurboTax Deluxe Online

Your post was cut off, but it appears you are referring to "Non-taxable combat pay" in your 2019 tax returns.

If you were military in 2019 and earned combat pay, it would show up on your 2019 Form W2 (Code Q in box 12).

When you completed your 2019 tax return, you had the option of including that combat pay in the calculation for the Child Tax Credit and/or Earned Income Tax Credit.

If you included the combat pay in 2019, you need to subtract it out of the top box (Earned Income) on the 2020 return page you are on and put it in the other box (Non-taxable Combat Pay).

If there was no combat pay included in your 2019 return, then you put in all earned income in the top box.

The Earned Income Credit Worksheet from your 2019 return will have all the information.

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M

msehein

My question is the same and there is no combat pay as we are not veterans. It just told me I would benefit from using my 2019 earned income as it's larger than 2020's.

What are the ramifications of recalculating using prior year's income? It doesn't make sense to me to be able to do that.

Thank you.

KrisD15

For the 2020 Federal tax return, you are allowed to use your 2019 income (for certain credits) if that year's income was higher and it results in a better credit.

It is part of the Cares Act to help those Taxpayers that earned less in 2020 because of the pandemic.

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