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January 27, 2021
Question

Was asked if I wanted to use my 2019 EIC and if I did I needed to subtract my non taxable combat pay

  • January 27, 2021
  • 1 reply
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from the EIC of 2019

1 reply

DMarkM1
January 27, 2021

The election to use your 2019 income for the Earned Income Credit would help if you have a lower income in 2020 than 2019. It is designed to help those who may have lost a job due to the COVID pandemic.   

 

The Earned Income Credit starts small at low income levels and climbs up to peak income levels between $20,000 and $25,000 and then tapers off as income gets higher.  So if you had income in the $20,000 to $30,000 range in 2019, but only $15,000 of income in 2020, then it may behoove you to use your 2019 income to figure the credit. 

 

Military taxpayers can use the "Combat Pay Exclusion" in the same way.  If your income without the combat pay is low you can include the income for Earned Income Credit Calculations to bring your income into the higher credit income ranges. 

 

TurboTax will help you decide which option works best you as you answer the interview questions for the Earned Income Credit topic. 

 

Here is a link to the IRS Publication for more information.   

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