Just before Thanksgiving, the Internal Revenue Service took time to talk turkey about one major tax break for low and moderate-income families. On Nov. 22, IRS warned that taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit on their upcoming returns for 2016 can’t expect to receive a refund before Feb. 15.
That date really doesn’t have anything to do with how soon a taxpayer can send in a return. It’s now the law; the IRS simply is not allowed to pay out any quicker. Congress itself ordered the agency to hold back all refunds with those types of credits until mid-February. In its announcement, the IRS said the hold-up in early refunds will give it more time “to help detect and prevent fraud.”
While the delay in refunds was publicly disclosed, there’s also a lot going on behind the scenes to combat identity theft and other frauds. “These increased security screenings are invisible to most taxpayers,” IRS Commissioner John Koskinen said.
Some of those precautions behind the scenes involve tax preparers. Among them, paperwork has increased and the IRS has stiffened penalties for “reckless preparation” of forms applying for the Earned Income ax Credit and other related credits, EricJohn Ltd. owner Eric Buechler said.
Beginning with the 2016 tax return, taxpayers filing for the earned income and child tax credits should be prepared to document how household bills might be paid during a financial emergency, Eric said. Specifically, that might require documents such as a welfare or housing assistance statement or a court order for child support.
Despite the delay in early refunds for some taxpayers, most can still expect a refund check from Uncle Sam in their mailboxes within the normal time frame of about 21 days after the return is accepted for processing, the IRS said
As tax season approaches, we at EricJohn Ltd. can help with specialized tax credits or with tax planning.