Details of Public Law 117-2, section 9626 , Temporary Special Rule for Determining Earned Income for Purposes of Earned Income Tax Credit

For purposes of the earned income tax credit (EITC), if the earned income for the 2021 taxable year is less than the earned income of a taxpayer for the 2019 taxable year, the taxpayer may elect to substitute the earned income of the 2019 taxable year for the earned income for the 2021 taxable year. In the case of a joint return, the earned income of the taxpayer for the 2019 taxable year is the sum of the earned income of each spouse for the 2019 taxable year.

For purposes of this section, the IRS shall treat the incorrect use of earned income on a return as a mathematical or clerical error. Also, except with regard to this section, the substitution of earned income shall have no effect on gross income under the IRC.

This section also authorizes the Secretary of the Treasury to make payments to US possessions with mirror code tax systems due to the application of this section relating to the EITC. For US possessions that do not have a mirror code tax system, the section authorizes payments for the EITC benefits that would result due to application of this section if such US possession had a mirror code tax system.

For each taxable year beginning on or after 1/1/2015, California’s PITL conforms to the federal EITC as in effect under federal law for that taxable year, with modifications. California does not conform to the section to substitute the earned income for the 2019 year for the earned income of the first taxable year that begins during 2021. Therefore, for purposes of the CalEITC, 2021 earned income must be used for the 2021 taxable year.

California does not have EITC payment sections relating to US possessions.