EI Lookback with no dependents

[txtax]

A single 22 year old with no dependents had EI of $10k. Not claimed as a dependent.

In 2020, she had a baby and had EI of $5k.

Can she use the EI lookback of 2019 to calculate the earned income credit for 2020 since she made less? Have looked at pub 596 but don't see any guidance in this scenario that she should not.

[Dude]

She made $5k in 2020 and $10k in 2019?

In any event, this year I will be asking all EITC candidates about Robinhood accts. This has become very popular and I think many folks stepped over the investment income limit without realizing it.

[txtax]

She had no investment income. The earned income in 2020 was from a seasonal position before the pandemic started (got laid off in April). She lived 1st part of the year with family members and second part with friends. Does not qualify for HOH due to income and not maintaining the home over 50%.

The 2020 refund does increase when I use the 2019 EI but I'm stuck on the piece if this is OK since she did not have a dependent or EIC in 2019. Everything I've read regarding this rule does not say that you can't use EI for EIC purposes for this scenario.

[Lion]

You can use 2019 income for 2020 EIC and ACTC as long as 2019 income is higher than 2020.

[New York Enrolled Agent]

You can use 2019 income for 2020 EIC and ACTC as long as 2019 income is higher than 2020.

Lion - not trying to nitpick but I think it’s important to refer to earned income in 2020 is less than the earned income in 2019.

[Lion]

Very true, NYEA. If the client was in your software last year, it's probably automatic. But we need to review. And if a new client, we have to compute the earned income from 2019 to compare to 2020 EI.