For many people across the country, especially those on a tight budget, tax return season means tax refunds. Some look forward to putting their refunds towards paying off debt, while others use the money for rent or paying bills and other expenses. Unfortunately, many taxpayers can expect a delay in their refunds this year, thanks to a new bill aimed at cracking down on tax fraud. The legislation, the ‘Protecting Americans from Tax Hikes Act of 2015,’ otherwise known as the PATH Act, will implement extra steps when it comes claiming the Earned Income Tax Credit and the Additional Child Tax Credit on taxes this year. For instance, if you claim one of these credits on your returns, your refund could be held until February 15 or longer. That’s a three-week delay if you file on the earliest day possible.
While it’s great that measures are being taken to protect taxpayers from fraud, it’s bad news for those in dire need of that money or operating on tight budgets. So why do families have to wait so long? Is preventing fraud really that time consuming? Well, yes and no. Right now returns are due to be released February 15, and while there is processing time involved in tax returns to verify stuff like account information, the fact that President’s Day falls on February 20 is partly to blame for the wait. President’s Day is a federal holiday, which means that banks are closed and will require more time for refunds to show up in bank accounts
What are the Earned Income Tax Credit and the Additional Child Tax Credit, though? These credits are available to those who are working but don’t make a lot of money. For example, the total household income for 2016 cannot exceed $47,955 to qualify for the Earning Income Tax Credit if you’re single and have three or more children and $53,505 if you’re married filing jointly. If you’re single with one child, the income limit is $39,296, and if you’re married filing jointly with one child, the limit is $44,846. If you don’t have any children, the income limit is $14,880 if you’re single, and $20,430 if you’re married filing jointly.
The Additional Child Tax Credit is unique in that it sometimes results in a refund even if the taxpayer doesn’t owe anything. The downside is that if you’re able to claim the full Child Tax Credit at $1,000 per qualifying child, you won’t be eligible for the Additional Child Tax Credit.
Depending on a family’s income and number of qualifying children, they could be waiting for tax refunds worth thousands of dollars. So what can be done to speed up the process, if any? Well, e-filing and signing up for direct deposit are always the fastest way to receive a refund. So if you haven’t signed up for either of those, you might consider doing so soon.
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