Changes to the 2018 Publication 596 due to the Taxpayer Certainty and Disaster Tax Relief Act of 2019

 

The Taxpayer Certainty and Disaster Tax Relief Act of 2019 included retroactive tax relief for those impacted by certain federally declared disasters for tax year 2018. The 2018 Publication 596 is not being revised at this time. Instead, consider whether the following important changes impact your 2018 tax return.

The tax benefits provided by this federal disaster relief include an election to use your 2017 earned income to figure your 2018 earned income credit. You may be able to use your 2017 earned income to figure your 2018 earned income credit (EIC) if:

  1. Your 2017 earned income was greater than your 2018 earned income.
     
  2. Your main home, or the main home of your spouse if filing jointly, was located in one of the federally declared disaster zones (or the disaster area outside of the disaster zone if you, and your spouse if filing jointly, were displaced from the main home due to the disaster) during any portion of that disaster's incident period occurring in 2018.

Disaster area. This is any area where a major disaster was declared after 2017 by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, except the California wildfire disaster area defined in the Bipartisan Budget Act of 2018.

Disaster zone. This is the portion of any disaster area which is determined by the President to warrant individual and public assistance from the federal government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

Incident period. The incident period is specified by the Federal Emergency Management Agency (FEMA) as the period during which the disaster occurred, but not including any dates before 2018 or after January 19, 2020.

Joint returns. If you file a joint return, you qualify to make this election even if only one spouse meets the requirements. If you make the election, your 2017 earned income is the sum of your 2017 earned income and your spouse's 2017 earned income.

To make this election, enter "PYEI" and the amount of your 2017 earned income in the space next to line 17a on your 2018 Form 1040.

If the retroactive tax relief provided by The Taxpayer Certainty and Disaster Tax Relief Act of 2019 impacts your 2018 tax return, you can find more information about amending a tax return at IRS.gov/form1040x.