It’s 2022, and some of the pandemic-era relief measures many Americans depended on over the last two years have gone away. Despite this, many people are still struggling and looking to their tax return for some relief. The Internal Revenue Service (IRS) is still working through backlog caused by the pandemic, but this isn’t the only thing projected to hold up returns this year. Though the Protecting Americans from Tax Hikes Act (PATH) was introduced in 2015, expanded tax credits during the pandemic may increase the legislation’s effect on return timelines this year.
What’s the PATH Act?
Congress enacted the PATH Act in 2015 with the goal of expanding or renewing tax credits while also working to prevent fraud. As a result, the IRS can’t issue an early refund on tax returns claiming an eligible tax credit. This includes the Child Tax Credit and the Earned Income Tax Credit (EIC). Criminals may fraudulently claim one of these credits, leaving the intended recipient high and dry. By taking the time to review claims, the IRS hopes to catch fraud.
The IRS has until mid-February to issue tax refunds to filers claiming the EIC or Child Tax Credit. They say filers can expect their return by March 1 so long as they file online, set up direct deposit, and have no issues detected on their return.
Implications This Year
Versions of the Child Tax Credit have been around since the 90s. The version introduced under the American Rescue Plan Act of 2021 increased the amounts per qualifying child, expanded eligibility to 17-year-old dependents, introduced an option for advanced payments, and made the credit fully tax refundable in most cases. When compared to previous Child Tax Credit rules, the treasury estimates families containing over 26 million children were able to receive the full, expanded credit.
The EIC has been around for even longer than the Child Tax Credit, having been first introduced in 1975 under the Ford administration. It gives a tax break to low-income earners, offsetting the cost of Social Security taxes. Unlike the Child Tax Credit, filers don’t have to have children to claim the EIC. But if you are a parent, you can claim qualifying children and potentially increase the amount you are eligible for. As well, while the filer needs to have a Social Security number, their children do not. This is a change from years prior and allowed more people to qualify for the credit.
While the PATH Act is standard and affects some tax returns every year, it may impact more filers due to the increased number of Americans who qualified for either the Child Tax Credit or the EIC in 2021. Be mindful of the March 1 IRS deadline and adjust your budget if needed to accommodate for the delay.
Setting up direct deposit with General Electric Credit Union (GECU) is an easy way to get your tax return faster. First, you’ll need the account number for your GECU account and the Credit Union’s routing number (2420-7682-1). You can find this information through:
- Statements. Your account number will be listed.
- Online Banking. Go to My Accounts then select the account you want to access. Hit the carrot next to Account Details to view your account number.
- Mobile app. Go to Accounts then click the account you want to access. Select Details and the account number will be listed alongside your other account information.