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The PATH ACT

Changes in EITC Tax Refunds Processing

What is EITC?

 

The United States federal earned income tax credit or earned income credit (EITC or EIC) is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends on a recipient’s income and number of children.

Each year, millions of dollars of unclaimed tax credits are unclaimed. VITA volunteers provide FREE income tax assistance to taxpayers and help them claim important tax credits such as EITC and the Child Tax Credit.

What is the PATH ACT?

 

On December 18, 2015, Congress passed the PATH (Protecting Americans from Tax Hikes) Act which made over 20 tax provisions permanent, including tax credit expansions to the EITCACTC, and American Opportunity Tax Credit (AOTC) that were set to expire in 2017. The PATH Act also requires a change in the issuing of EITC and ACTC refunds.

Beginning in 2017, no refund will be made to a taxpayer before February 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return. This will allow the IRS to verify income reported on those returns since employers are now required to file W-2 forms and 1099s by January 31 (previously they had until March).

Most refunds are expected to be issued within 21 days of processing. If the IRS identifies significant mismatches between the income information provided on the return and provided by employers, there can be additional delays as the IRS seeks to resolve the mismatch.

What VITA Customers Need to Know

 

  • File as you normally do. You do not need to change the way you file your tax return, including where you get your taxes done.
  • The delay applies to all methods of tax filing – at a VITA site, by a commercial tax preparer, or self-preparation. No one can provide your refund before February 15. There are no exceptions.
  • The purpose of the refund delay is to help protect you and your refund.
  • Beware of offers of loans against delayed refunds, such as a loan on a refund claim based on a year-end pay stub instead of a W-2. Loan fees are expensive and the return may be inaccurate without all income information, but the loan must be repaid.
  • While the delay applies specifically to tax filers claiming the EITC and ACTC, it will affect your entire refund, including refunds based on over withholding or other tax credits. You cannot receive a partial refund.
  • Everyone is not affected by the delay. Taxpayers claiming the EITC and ACTC who file returns after February 15 will not be impacted. Additionally, early filers who are ineligible to claim the EITC or ACTC will not be affected. Refunds based only on over withholding or other tax credits will not be held.

Why You Should Use VITA

 

  • FREE – Filers save between $200 – $400 in tax preparation fees when they use VITA
  • QUALITY – All VITA volunteers are IRS certified and looking after your best interests. They are committed to quality, ensuring that all tax filers get every tax credit for which they are eligible, including the Earned Income Tax Credit (EITC).
  • QUICK – Refunds usually come back to filers within 5 to 10 days with the exception of returns that fall under the Path Act. Please allow one to three hours to complete the filing. The wait depends on location, time of day and number of tax filers ahead of you in line.
  • COMPLETE – The Earned Income Tax Credit (EITC) is an important tax benefit for low-income working families, but many filers don’t understand it, so they don’t take advantage of it. The credit, available only to individuals who are employed United States citizens, is added directly to any refund received. During the 2015 tax season, the average Earned Income Tax Credit at Tarrant County VITA locations was $2,000 for families that qualified. VITA volunteers can identify whether you qualify.
  • CONVENIENT – Many of our locations have child-friendly areas where they can sit, play or do homework. Call ahead to the location to see which location best suits your needs.
  • NEARBY – There are 16 locations within Tarrant County. Check to see hours and days of operation.
  • EDUCATIONAL – VITA volunteers not only answer your questions concerning tax preparation, they also guide filers through the 30/40/30 campaign.

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