During the COVID pandemic years of 2020 and 2021, the American Rescue Plan (ARPA) included legislation that provided a “lookback” rule that allowed tax filers to use prior year income levels to calculate qualification for many of the expanded tax credits and stimulus programs.
This was done to allow the millions of low to moderate income Americans suffering from pandemic induced unemployment or economic hardship to quality for the more generous federal tax credits funded under the ARPA act and related bills.
For example tax payers could use their 2019 or 2020 earned income instead of 2021 earned income to calculate how much they would get when it came to credits like the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC).
So based on the tax year selected tax fillers could potentially get a larger tax credit (and refund) when filing their 2021 tax return.
In fact, the EITC lookback provision in particular allowed many millions of taxpayers to not only qualify but also oftentimes get a larger tax credit if their income was reduced in 2020 or 2021 due to unemployment or other reasons.
However with no new legislation passed in 2022 to extend this provision (since the COVID emergency is deemed over) the lookback rule will no longer be available in 2023, for filed 2022 tax returns.
Qualification rules using income to determine eligibility and amounts received will revert to using the most recent tax levels in line with pre-COVID requirements. You can use leading tax filing software to determine what you will get when you file in 2023.