Tip for Unemployment Claimants Who Did Not Claim Earned Income Tax Credit

This is an important update for people who didn’t claim the Earned Income Tax Credit (EITC) because their full amount of 2020 unemployment compensation put them over the income limit. 


On March 11th, a change to the law allowed people to exclude up to $10,200 of unemployment compensation from their 2020 federal tax returns.  For married couples who each got unemployment, they can each exclude up to $10,200 of their unemployment. For some people, this exclusion makes the difference between whether they qualify for the EITC or not.


For those who already claimed the EITC, but who would qualify for more than they got once the unemployment exclusion applies, the IRS will recalculate your taxes automatically and issue any additional refund to which you are entitled. They will also automatically issue refunds to people who become eligible for the EITC without children.


But for those who have qualifying children and who didn’t claim any EITC, and who now qualify because of the unemployment exclusion, you will have to file an amended return.  You didn’t claim the EITC if line 27 of your tax return is zero or blank. 

This could affect people who reported all of their 2020 unemployment compensation on their tax returns without taking the unemployment exclusion (including all those who filed their tax returns before March 11th), and who reported total income within the ranges below:

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If you are one of these people, bring your 2020 tax return back to your preparer, or go to a Volunteer Income Tax Assistance site https://cwfphilly.org/