Tax Refund Delays Affecting Over 20 Million Americans

More than 20 million Americans are facing delays in receiving their tax refunds due to claims for the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). Taxpayers who file for these credits must wait until at least March 2, 2024, to receive their refunds from the Internal Revenue Service (IRS). If they opt for a check rather than direct deposit, the wait could be even longer.

Newsweek

The EITC is a refundable tax credit aimed at assisting low- to moderate-income workers. For the 2024 tax year, approximately 23.5 million workers and families received the EITC, with a total payout of around $68.5 billion. The average credit amount was $2,916 per household. Eligibility for the EITC requires filers to have earned income below specific IRS limits, with higher thresholds for those with children. Filers without qualifying children must be between 25 and 64 years old and cannot be full-time students.

Newsweek

The IRS has implemented a hold on refunds for those claiming the EITC and ACTC to verify reported income and prevent fraudulent claims. This verification process is crucial, as it allows the IRS to confirm the accuracy of reported information before releasing funds. Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, emphasized that the hold affects the entire federal tax refund amount, not just the credits claimed.

Newsweek

Kevin Thompson, CEO of 9i Capital Group, noted that the verification process is designed to prevent improper payments, stating, “The hold is intended to prevent fraudulent claims, as more than 23 million workers applied for the credit last year.” He also mentioned that while the delay may come as a surprise to many taxpayers expecting early refunds, it should not impact the total refund amount deposited into their accounts.

Newsweek

Some critics argue that the delay could cause financial strain for low- to moderate-income families who rely on timely refunds. Beene pointed out that many filers may not anticipate the hold, which could lead to unexpected financial difficulties for those expecting early refunds.

Newsweek

Taxpayers can check the status of their refunds using the IRS's "Where’s My Refund" tool, which will provide projected deposit dates for EITC and ACTC filers by February 21, 2024. Despite the delays, it remains important for eligible filers to claim these credits, as they can receive refunds even if they owe no taxes.

Newsweek

• “If you qualify for one of these credits, it's important to remember the hold pertains to your entire federal tax refund amount and not just the amount of the credit, meaning the RIS will not send you a refund until the credits have been cleared.” — Alex Beene, Financial Literacy Instructor

Newsweek

• “ Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “Nearly 20 million Americans could see their tax refunds delayed this year due to the Earned Income Tax Credit (EITC).” — Kevin Thompson, CEO of 9i Capital Group

Newsweek

• “For many, the delay may come as a surprise, especially for those expecting an early refund,” — Kevin Thompson, CEO of 9i Capital Group

Newsweek