People filing and claiming tax credits early on may have to wait longer when it comes to getting their refunds. The blame for this delay is squarely at the door of the Internal Revenue Service (IRS). The government organization is trying to crack the whip on fraud. It is expected that millions of households will be affected by the fraud - more so if the families have children. There are a number of good reasons for this particular delay.
EITC and ACTC
The IRS is compelled by the 2015 crafted Protecting Americans from Tax Hikes Act to hold the tax refunds for a few particular taxpayers. These taxpayers claim additional child tax credit or earned income tax credit until the arrival of calendar date February 15 in 2017. The problem is that criminals take advantage of such credits and put in fake tax returns, the extra time is to be used by IRS to detect fraud.
According to Jeff Chism of Brown, Kinion & Co, both the credits have considerable appeal to fraudsters. This is as they not only can reduce the quantum of federal tax which is owed by them, but also could generate refunds. To put in perspective, the worth of EITC was valued to be $6,269 in 2016. The ACTC is derived from $1,000 per kid of child tax credit.
According to David Creasy, a CPA from Richmond, Virginia, both the EITC and the ACTC provides a swift refund. The sums add up to a lot of money as numerous fraudulent returns are filed. These returns number in the thousands.
Start of refund
The IRS will start to release the affected refunds within February 15. However the weekend, processing time and the coming Presidents Day implies that the money will not register in debit cards or bank accounts until the February 27 week. These may cause budget strains for low income households- the target segment for such tax credits in the first place. However, Chris Whalen, a New Jersey CPA, says that those who qualify for such credits must not forfeit the same for a quicker refund. He says that those who qualify needs every dollar-and it is worthwhile to use this scheme to make this possible.
A taxpayer in this regard must file as quickly as possible to get the IRS refund. The earlier the filing, the quicker will the disbursements be. This is important as disbursements may be staggered.