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  THE LOW INCOME & URBAN HOUSING BLOG  

Monday, November 28, 2016

Why Low Income Families Should Expect Tax Refund Delays in 2017

Low income family preparing taxes

Every year, nearly eight out of 10 U.S. tax filers get a federal tax refund. The average amount paid over the past few years was roughly $2,800, according to the most recent data from the IRS. Low-income families, in particular, look forward to refunds and file early so they can get their refunds sooner. But they should expect delays in their refunds in 2017. Why?
Preventing fraud

According to the IRS, no one claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) should expect refunds any sooner than at least February 15, 2017. Why? Fraud and theft was discovered last year in about 26 million returns claiming $65.6 billion of Earned Income Tax Credits for 2015. So, low-income filers who are in the habit of filing early in order to get their refund within 21 days will have to wait a little longer in 2017.

No refunds before February 15th

E-filing for 2016 returns begins about January 23. According to the IRS, the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) that was enacted Dec. 18, 2015, made several changes to the tax law to benefit taxpayers and their families, ensuring they get their full refunds.

No refunds will be made to taxpayers before Feb. 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return. The IRS states, "This allows additional time to help prevent revenue lost due to identity theft and refund fraud related to fabricated wages and withholdings."

It may sound complicated, but it is what it is, and the IRS wants all tax preparers to communicate this change to taxpayers so they do not expect their tax refunds as quickly in 2017 and they received in 2016. More time is needed to ensure that low-income taxpayers are not ripped off by identity theft that would prevent them from getting their full refunds. So, look at the change as a good thing.

For more details about tax credits for low income families, visit www.irs.gov/credits-deductions/individuals/earned-income-tax-credit


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