Tax refund delays for EITC recipients

Thursday, December 22, 2016

Some financially strained taxpayers who file early and rely on tax refunds to help cover monthly bills after the holidays will have to wait longer to receive their money in the new year.

Low-income taxpayers who claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) should not expect to see a tax refund arrive until mid to late February 2017.

Congress passed the Protecting Americans from Tax Hikes (PATH) Act, which requires the IRS to delay refunds on tax returns claiming the EITC or the ACTC until February 15, 2017 to give the tax agency time to detect and stop tax fraud. The new law requires the IRS to withhold the entire refund, even the portion not related to the EITC or ACTC.

Realistically, the IRS has warned that these taxpayers won’t receive refunds until the week of Feb. 27. Nevertheless, the agency recommends that consumers file their tax returns as early as possible to prevent further delays due to math errors or other processing problems.

The IRS plans to post projected refund direct deposit dates on the Where’s My Refund? section of the website.

Beware of offers for refund advances through “no fee” refund advance loans (RALs) or refund advance checks (RACs) that may include a fee hidden in the price of the advance.

For low- or no-cost help filing a tax return, find a local VITA (Volunteer Income Tax Assistance) site using the IRS VITA locator tool, call 800-906-9887 or visit AARP’s website.