I’m retired now but worked a bit last year, made about $2500, paid no federal or state tax. I just did my tax return (short form) online, FreeTaxUSA, where I’ve been doing it for years. At one point it said I was eligible to use my 2019 income for tax credits or something like that and advised me to do that since it was considerably more than my current income and my refund is now almost $1400. Since I didn’t pay anything last year I didn’t think I’d get a tax refund at all.
Could that be correct or did I make a mistake somewhere? Thanks.
At one point it said I was eligible to use my 2019 income for tax credits or something like that and advised me to do that since it was considerably more than my current income and my refund is now almost $1400. Since I didn’t pay anything last year I didn’t think I’d get a tax refund at all.
My guess is that you got the Earned Income Credit (EIC). Because of COVID, the law changed to allow taxpayers to use their 2019 (i.e. pre-COVID) income to qualify for EIC if their 2019 earned income was more than their 2021 earned income. Check line 27 on your 1040 to see if that section is populated with information about the EIC.
Election to use prior-year earned income. You can elect to use your 2019 earned income to figure your 2021 earned income credit (EIC) if your 2019 earned income is more than your 2021 earned income. To make this election, enter the amount of your 2019 earned income on Form 1040 or 1040-SR, line 27c.