Posted byon February 9, 2017
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There is a new delay this year for tax refunds. The delay will apply to 2016 tax returns filed in 2017. This year, the delay is due to a new law, the PATH Act of 2015.
The law requires that tax refunds including the earned income tax credit or the additional child tax credits will be held until February 15. However, once they are released and processed, the actual tax refund probably won’t show up until the end of February or early March.
The IRS announced that the new tax law requires your entire 2017 tax refund to be held until February 15 if you claim either of these tax credits:
The entire refund will be held, not just the tax credits above.
Please note that the delay applies to the additional child tax credit, not the standard child tax credit.
Once February 15 rolls around, you’ll still have to wait for processing. Typically, tax refunds are issued in less than 21 days. The IRS estimates that the delayed refunds may begin to show up during the week of February 27 for direct deposit.
Checks and any processing issues will delay the refund longer. Also see How Long Does it Take to Get Your Tax Refund Back?
The purpose of the delay is to prevent fraud:
The additional time helps the IRS stop fraudulent refunds from being issued to identity thieves and fraudulent claims with fabricated wages and withholdings.
Here are some helpful statistics to understand the magnitude of the refunds sent by mistake:
The Tax Foundation calculated from the Treasury Inspector General for Tax Administration report that:
A 24 percent error rate meant $14.5 billion in tax dollars that were improperly paid out to individuals in FY 2013.
Can you file your tax return before February 15?
Yes, you can file your tax return before February 15. However, if you file before then, there won’t be any information on the status of your refund until after that date.
Are these refundable tax credits?
Yes, the EITC and ACTC are refundable credits and can generate refunds that exceed your tax liability. What is the Difference Between Refundable and Nonrefundable Tax Credits?
Will the tax deadline be extended?
Should you file by paper?
No. You will still get your tax refund quicker by e-filing, even with the delay. The IRS won’t process paper forms earlier.
Should you request a check instead of direct deposit?
No. The IRS has stated that direct deposit will still be the fastest way to receive your refund.
Are other tax credits impacted by the delay?