Written by Ross Yednock, Program Director of the Michigan Economic Impact Coalition (MEIC)

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“Everyone can begin filing their taxes as soon as tax season begins; however, due to the Protecting Americans from Tax Hikes (PATH) Act passed in December of 2015, the IRS must hold all refunds with either a EITC or ACTC claim until February 15, 2017.”
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If you, or your clients, receive either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), there is an important change with both of these credits that begins next year. Starting in January 2017, the IRS will hold any tax refund with the EITC and/or ACTC until February 15. This means that for the many people planning to use their tax refund to help caution holiday expenses, pay essential bills or build savings, they may have to wait longer than in the past. To learn more about this delay, download this flyer for more information on the EITC and/or ACTC delay.

Everyone can begin filing their taxes as soon as tax season begins; however, due to the Protecting Americans from Tax Hikes (PATH) Act passed in December of 2015, the IRS must hold all refunds with either a EITC or ACTC claim until February 15, 2017.

The rationale for this is to prevent fraud. The reality is that some taxpayers may be caught off-guard or unprepared, especially if they are have already planned on using their tax refund for a specific or timely purpose like fixing their car, past rent or security deposit on a new apartment, getting caught up on bills or even the down payment on a new home. It does not matter if the taxpayer does their own taxes, pays a preparer or goes to a free site like those found on MichiganFreeTaxHelp.org; if the taxpayer is claiming the EITC and/or ACTC, they will have to wait until February 15 to receive their returns.

dollar-499481_1920This is why I would argue that if you, or your clients, do not use a free tax site, now is the time to change. In addition to saving money on tax preparation fees, there will be no hard-sell for any high-cost advance-refund check and you can be sure that the person who prepares your taxes is competent and certified by the IRS. In Michigan, there are no rules or regulations for paid tax preparation. Anyone can charge to prepare taxes without passing any competency or ethics test. All IRS-sponsored Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE or AARP Tax Aide sites) require volunteer tax preparers to be certified by the IRS in both tax law and ethics. In other words, it really doesn’t pay to go to paid tax preparer if you are able to get your taxes done for free!

In order to make sure you receive your refund as quickly as possible, you will want to make sure you have all the documents and statements you need to verify your income and deductions for which you are eligible before you go to any tax preparer. Once you have all the necessary documents, file your taxes. Waiting to file will only delay your refund. Finally, you may see advertisements or offers for loans or advances to access your refund faster. Be careful. Read the terms of any type of “refund advance” before accepting it and, if you feel you are being pushed into taking one out, take all your original documents to a free tax site. Remember, no one can get your refund to you any faster than anyone else.

You can learn more about the delay on the Internal Revenue Service’s website.

To find a free tax site location, dial 2-1-1 or go to the MEIC’s taxpayer website. The list of sites will be posted and update beginning in January.

For more tips on preparing for the refund delay, check out this Consumer Financial Protection Bureau blog.

If you have a topic or idea that you think could make a great CEDAM blog post, please contact Kaylee Kellogg at kellogg@cedamichigan.org.

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