Tax delays expected for more than 40 million Americans because of new rules

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More than 40 million Americans are likely to see some hefty delays in tax refunds this year. It’s all because of changes to the tax law that impact people who get credits for things like income and children. The people most affected are working class and poor american families.

Ever since his oldest son was born, Osie Cotton in Spartanburg has been eligible for the Child Tax Credit, $1000 dollars per child. But this year, he may not see that cash back from the IRS for a while.

“It’s going to be devastating not to have it on time as usual from year to year, because I had already planned to use that money for various things, like you know, Christmas debts, kids clothing and so forth,” he said.

“It may be June before some of these people get refunds,” said IRS Enrolled Agent, Dan Thomas.

He says changes to tax laws through the PATH Act now give the IRS more time to review claims that include credits to reduce fraud and ID theft.

“This is going to affect the majority of the people that are the average tax payer. If they’re working jobs, husband wife, mom with kids or dad with kids, those people that are due the Earned Income Credit, the Child Tax Credit, the Additional Child Tax Credit, and the American Opportunities Credit (for college expenses), they may not see the refund for quite some time,” said Thomas.

IRS records show 20 million Americans who earn less than $150,000 depend on the $27 billion dollars they get from the Child Tax Credit. The Center on Budget and Policy Priorities shows this graph of who is eligible.

The earned income tax credit pays out 72 million to another 29 million households earning less than 50-thousand. Here’s the CBPP graph for that.

Keep in mind, if the IRS does delay your return and requests supporting documentation. The agency will send you a letter, not call you, so don’t fall victim to those phishing scams.

If you do get a notice, you may be required to provide more proof like your child’s school and medical records, your lease agreement and utility bills.

The delay is disheartening to people like Cotton, but he says knowing it could curb the flood of tax dollars going to scammers, puts it all into perspective.

“It might be disappointing, but overall it’s worth it,” said Cotton.

Now, even if you may be affected by the delay, it’s still crucial to submit your tax return as soon as you can. That’s because it may help safeguard you against ID theft if you can beat the scammers to it.

The first date you can file is January 23rd and the earliest anyone will get a return is February 15th. That’s if everything goes smoothly.

Here’s how you can follow your tax return status.

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