Figuring and Claiming EIC in 2020

 You must meet one more rule to claim the EIC.

You need to know the amount of your earned income to see if you meet the rule in this chapter. You also need to know that amount to figure your EIC.

Rule 15—Earned Income Limits

Your earned income must be less than:

  • $50,954 ($56,844 for married filing jointly) if you have three or more qualifying children,

  • $47,440 ($53,330 for married filing jointly) if you have two qualifying children,

  • $41,756 ($47,646 for married filing jointly) if you have one qualifying child, or

  • $15,820 ($21,710 for married filing jointly) if you don't have a qualifying child.

Earned Income

Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Employee pay is earned income only if it is taxable. Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, isn't earned income. But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Earned income is explained in detail in Rule 7 in chapter 1.

Election to use prior year earned income.

 

You can elect to use your 2019 earned income to figure your 2020 earned income credit (EIC) if your 2019 earned income is more than your 2020 earned income. To make this election, enter "PYEI" and the amount of your 2019 earned income on the dotted line next to Form 1040 or 1040-SR, line 27.

If you file a joint return and make the election, your 2019 earned income is the sum of your 2019 earned income and your spouse's 2019 earned income.