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March 2, 2021
Question

I made $1900 too much to qualify for EIC. Is there anyway to fix that at this point (contribute to retirement, etc.)?

  • March 2, 2021
  • 2 replies
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2 replies

ColeenD3
March 2, 2021

See this answer from MichaelL1

 

Doing an IRA contribution may lower the tax bill but will not change the numbers in qualifying for Earned Income tax credit.   

See detail below as the IRA contribution is added back to the income on the return to get the  Modified Adjusted Gross Income (MAGI) For Earned Income Credit.

 

Your Modified Adjusted Gross Income (MAGI) For Earned Income Credit differs from your AGI in that it may be higher, with certain adjustments added back. (These are the same adjustments that were previously subtracted from your income to arrive at your AGI.) For example, the alimony payments that were subtracted from your income for AGI purposes must be added back to calculate your MAGI.

 

Some items that can increase your MAGI include the following:

 

• Tuition-related costs and deductions
• IRA contributions

Employee
March 2, 2021

Even if you could reduce your income by $1900, your EIC amount is likely to be very small.  EIC is calculated on a "bell curve."  That is, it goes up as your income goes up, but only to a certain point. Then it starts to come down, so it is close to zero as your near the maximum allowable income. (Some people misunderstand this, and  think that they get the maximum EIC at the maximum allowable income.)  See tables that start on page 31 here:

2020 Publication 596 (irs.gov)