Details of Public Law 116-260, section 211 , Temporary Special Rule for Determination of Earned Income

For purposes of the child tax credit and the earned income tax credit (EITC), if the earned income for the first taxable year that begins in 2020 is less than the earned income of a taxpayer for the preceding taxable year, the taxpayer may elect to substitute the earned income of the preceding taxable year for the earned income for the first taxable year that begins in 2020. In the case of a joint return, the earned income of the taxpayer for the preceding taxable year is the sum of the earned income of each spouse for the preceding taxable year.

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

California does not conform to the federal child tax credit. The Young Child Tax Credit (YCTC) became available in California for the 2019 taxable year. It applies to taxpayers that qualify for the California EITC (CalEITC) and have a child under the age of 6 as of the end of the taxable year. The YCTC provides for a credit amount of up to $1,000.

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 provision to substitute the earned income for the preceding year for the earned income of the first taxable year that begins during 2020. Therefore, for purposes of the CalEITC, 2020 earned income must be used for the 2020 taxable year.