In an effort to stem tax refund fraud, the IRS must wait until at least February 15 to issue refunds to taxpayers who claimed the Earned Income Tax Credit or the Child Tax Credit.
Congress moved forward with the change to ensure the IRS has ample time to process W2 and 1099 forms before issuing refunds to taxpayers. Employers are required to report W2 and 1099 data to the Social Security Administration and IRS by January 31.
The change, which will delay refunds for millions of families, begins in 2017. The IRS is expected to release more information on the measures this summer.
To aid affected taxpayers, TaxSlayer Pro clients can inquire about bank product advances which could help individuals receive payment prior to the IRS issuing refunds. Additionally, educating taxpayers about the new law in advance of tax season will help families plan their finances while taking into account their refunds might be delayed.
The Earned Income Tax Credit (EITC) targets working people with low- to moderate-income levels. For the 2014 tax year, credits totaling $66.7 billion were issued for 27.5 million EITC claims. Individuals claiming the EITC are more likely to file early in the tax season, however, it is not clear the number of taxpayers who will be affected when refunds do not go out before February 15.