Claim this tax credit? Prepare for delayed refunds

Image Source: Getty Images

You may have to wait a little longer to receive the money.

Low-income households generally tend to struggle financially. But 2022 has been a particularly tough year for low-income earners. This is because inflation spiked from the beginning of the year to the end of the year, forcing many people into high credit card debt just to survive.

To make matters worse, the child tax credit was not boosted in 2022. In 2021, the maximum child tax credit has been increased and the credit has been fully refunded. This meant that a filer who was eligible for the credit could claim the full amount of the credit even if he didn’t owe his IRS money.

Still, there are certain tax credits that low-income files can generally get.

Income Tax Credit (EITC) — In 2022 there were so many available. What makes the EITC so valuable is that it is fully refundable.

However, if you apply for the EITC and file your tax returns in January, you should know that you may not receive your tax refund immediately. Here’s why:

It’s all about preventing fraud

EITC is fully refundable and is therefore associated with a higher level of fraud. Thus, the Protecting Americans Against Tax Increases Act (PATH) changed tax law and required the IRS to withhold his EITC-related refunds until his mid-February.

Today, you can typically submit your tax returns electronically and, barring any errors, expect your tax refund to appear in your bank account within 21 days. So if he filed his taxes in late January, he could get the money by mid-February, but not if he was charged EITC when he filed. If you’re claiming that credit instead, you may not get your refund until late February.

And to be clear, the IRS needs to hold you whole If you claimed EITC on your tax return, we will issue a refund. Part of the refund associated with that particular credit cannot be withheld.

Is the EITC even worth advocating?

absolutely. You may not appreciate having your tax refund pending. But the EITC is such a lucrative tax credit that it might be worth delaying your refund to get that money.

The amount the EITC pays you depends on the size of your household. However, his EITC value for the 2022 tax year is:

• $560 for eligible childless filers
• $3,733 for filers with one eligible child
• $6,164 for filers with two eligible children
• $6,935 for filers with three or more covered children

For example, let’s say you’re eligible to receive up to $6,935, but you have to wait an additional 2-3 weeks to receive your tax refund. It may not be ideal to have to sit still, but are you really giving up nearly $7,000? Probably not.

Many people are desperate for their tax refunds this year considering inflation is rampant, but be aware that filing taxes and claiming the EITC in the coming weeks will put your refunds on hold. Must know. But having that information might make it easier to manage delays.