A Break for Working Families

The government is allowing people who qualify for the earned-income tax credit to use income from either 2020 or 2019, whichever will result in a bigger credit.

By Ann Carrns

Working families who rely on a federal tax credit to help pay the bills are getting a break this tax season: They can qualify for the credit based on whichever year’s income — 2019 or 2020 — puts the most cash in their pocket.

The earned-income tax credit was claimed by about 27 million people in 2019, mostly lower- and middle-income Americans with children.

The maximum credit for 2020 is $6,660, for families with three or more children. Last year, the average credit was about $2,500 a return, the Internal Revenue Service reports.

“It’s quite substantial,” said Timothy Flacke, executive director of Commonwealth, a nonprofit organization in Boston that promotes financial security.

The size of the credit varies based on income, family size and filing status. The credit is “refundable,” which means filers can claim it and receive it as a refund even if they don’t owe any taxes.

To claim the credit, filers must have so-called earned income — like wages or salary from an employer or self-employment income from gig jobs or freelancing. Jobless benefits don’t count, nor does money received from sources like alimony and child support.

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