RIO GRANDE VALLEY, Texas (ValleyCentral) — We are right in the middle of tax season and if you have already filed, your refund could be because of a popular tax credit.
A law called the Protecting Americans Against Tax Hikes, or PATH Act, requires the government to delay processing returns for anyone claiming the Earned Income Tax Credit.
What is the EITC?
The EITC was introduced in 1975. According to the IRS website, it helps low-to-moderate income workers and families get a tax break to reduce the taxes they owe or possibly receive a larger refund.
Daisy Villarreal, owner of a health insurance and tax preparation business in Brownsville explained, “You have to obviously make a certain amount of money to qualify for it. And that is the biggest amount that you get back, when people qualify for a return.”
According to the latest numbers from the IRS, the EITC was claimed by 23 million taxpayers nationally in 2023, including more than 2.5 million Texans.
The PATH Act
The PATH Act delays processing those refunds to give the government more time to scrutinize the tax filings.
“They make sure that every dependent that you have, and that you’re claiming in your tax return, you know, it is your child,” Villarreal said. “It is your qualifying dependent. It is, you know, the person that you are taking care of throughout the year. So that you pass the different rules that they have that makes somebody qualifying in your dependent in your tax return.”
Villarreal said she has to make sure her company is abiding by all the relevant tax laws because the IRS will not just go after individual taxpayers.
Tax preparers can be fined
Tax preparers can be fined tens of thousands of dollars for knowingly including incorrect information on a client’s return.
“Making sure we take care of our due diligence, you know,” Villarreal said. “If you do claim yourself, by yourself, you know you have to look for utility bills, mortgage, receipts that are just under your name.”
EITC processing schedule
According to the estimated IRS schedule, refunds for filers who took advantage of the EITC will not be processed until the end of this week.
It is estimated taxpayers could start to see direct deposit refunds sometime during the first week in March. For those receiving a paper check, that delay will be longer.
If you get a letter from the IRS saying there is an issue with your tax return, like missing information or they say you owe more money, the Texas Taxpayer Assistance Project, part of the Texas Rio Grande Legal Organization, is a non-profit that offers free legal advice to low-income individuals.