Covid Relief, 2019 or 2021 Earned Income?

Question:
Covid Relief and your 2019 or 2021 Earned Income? What's best for you?


Article, Solution:

COVID Relief Page for Tax Year 2021.

This temporary relief is provided through the American Rescue Plan Act and is similar to the Tax Relief Act of 2020.

Attention: If your earned income (W-2 income wages and/or net earnings from self-employment plus certain disability payments, etc.) was higher in Tax Year 2019 (not 2020) than in Tax Year 2021, you can use the 2019 amount to calculate your Earned Income Tax Credit or EITC for 2021. As you work through the credits section, you will be asked if you wish to use your 2019 income - otherwise, you can add it manually.

Under Federal Taxes > Deductions & Credits, navigate to the Earned Income Credit section and answer the prompts. You will be asked if you want to use your 2019 income to calculate this credit; elect to do so if you feel it may be more beneficial for you or to find out. Once this amount is calculated, you will see it reflected in your federal refund. eFile will use the amount that benefits you the most.

When you are in the tax app, don't rush this. Enter your 2019 Earned Income and see the results. You can also enter your 2021 Earned Income and compare. It's very difficult to predict which tax year Earned Income will be beneficial for you, but the eFile help will help select the best option for you. Contact us if you have questions.

Below is the COVID Relief entry screen:

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