Final answer:
The incorrect word in the sentence is 'passed.' The correct word that should be used is 'past' as it refers to the time before the present.
Step-by-step explanation:
The word used incorrectly in the sentence, "In the passed we've always stopped at Niagara Falls on our way to Aunt Nancy's house but this year we won't have time," should be past instead of 'passed.' The correct version of the sentence would be: "In the past we've always stopped at Niagara Falls on our way to Aunt Nancy's house but this year we won't have time." 'Passed' is the past participle of the verb 'to pass,' whereas 'past' refers to the time before the present.