Some tax refunds could take longer than usual this year
Taxpayers who are expecting refunds from the Earned Income Tax Credit or the Additional Child Tax Credit programs are going to have to wait a little longer for their money, the Internal Revenue Service said.
The reason? Identity theft and tougher screening measures used by the federal agency designed to weed out fraudulent tax returns and identity theft.
“We’ve had quite a few seminars on identity theft. It is a big concern,” said Tim Landrin, director of long-term care for the Southwestern Pennsylvania Area Agency on Aging in Charleroi. “We try and keep up-to-date.”
Compounding the problem is that the IRS is now required by law to hold refunds for people who file early and claim the EITC, or additional child credit, until Feb. 15.
People who file their returns early and claim the additional child credit, or the EITC, or both, will likely not see a refund until the end of February. The delay could affect 40 million families across the country.
“For most of these people, it’s the biggest check they are going to get all year,” IRS Commissioner John Koskinen said in an interview with the Associated Press. “We are sensitive to that.”
The federal agency said it issued $3.1 billion in fraudulent tax returns in 2014, according to an Associated Press story. And in 2013, the IRS said it paid out $5.8 billion in fraudulent refunds. It also blocked nearly $47 billion in fraudulent refunds in 2013 and 2014.
“There has been a definite uptick in identity theft cases,” said Bryan Kisiel of Kisiel & Associates, a Connellsville certified public accounting firm. Kisiel also owns four Jackson Hewitt area tax preparation offices.
Koskinen said last year, the number of people who told the IRS that their identities were stolen dropped by 50 percent to 275,000 taxpayers because of the tougher screening measures.
Both tax credits now under additional scrutiny by the IRS are designed for low-income families who earn below $39,300 or up to $53,500, depending on the number of dependent children, and marital status.
“The first people to file are usually the ones who are getting refunds,” said Gary Boatman of Boatman Wealth Management LLC in Monessen, a financial planning firm.
The refund delay could also prove disastrous for many low-income people in Greene, Fayette, Westmoreland and Washington counties who may have earmarked tax refunds to pay off large bills like medical expenses. According to the U.S. Census Bureau, the 2015 median household income in Greene County was $46,661. Fayette County had a median household income of $39,636; Washington County, $56,450; and Westmoreland County, $52,247.
Most families who have children are eligible for the $1,000 a child tax credit. The additional child tax credit is for low-income families who don’t owe enough in federal income tax to claim the full credit. The EITC program, meanwhile, is a refundable tax credit for low- to moderate-income working individuals, or couples.
The IRS said in 2014 that 20 million families claimed $27 billion in additional child care credits, while 29 million families received more than $72 billion in earned income tax credits.
The federal agency said it expects to process more than 153 million returns this year. More than 70 percent of the taxpayers will get refunds. And in most cases, checks will be issued 21 days after a return is received.