IRS building sign

The Internal Revenue Service is promoting its annual EITC Awareness Day at the start of tax season to encourage more taxpayers to claim the Earned Income Tax Credit, while also acknowledging that such taxpayers will also face extra delays this year in receiving their refunds.

The IRS began the annual public awareness campaign 11 years ago, but this tax season it takes on extra significance as more taxpayers will be able to qualify for the tax credit. In addition, plans by the Trump Administration and the Republican-dominated Congress for comprehensive tax reform could potentially have an impact on the EITC next tax season.

The IRS noted that millions of taxpayers who earned $53,505 or less last year could qualify for EITC for the first time in 2017. Workers, self-employed people and farmers who earned that amount or less last year could receive larger refunds if they qualify for the EITC. Eligible families with three or more qualifying children can claim up to $6,269 on the credit.

Even taxpayers without children can qualify. The EITC for people without children could add up to $506 to their tax refund. Unlike most deductions and credits, the EITC is refundable so taxpayers who are eligible can get a refund from the IRS even if they owe no tax. Last year, more than 27 million eligible taxpayers received nearly $67 billion from the EITC. The average EITC amount was over $2,455.

The IRS recommends that all workers who earned around $54,000 or less learn about EITC eligibility on its website and use the online EITC Assistant tool to see if they qualify. The tool helps taxpayers determine their filing status, if they have a qualifying child or children, if they qualify to receive the EITC and estimate the amount of the credit they could get. If an individual doesn’t qualify for EITC, the Assistant explains why. They can print out a summary of the results and keep it with their tax papers.

“The EITC is an important anti-poverty tax credit that helps millions of people every year,” said IRS Commissioner John Koskinen in a statement. “Even though four out of five eligible workers and families benefit from the EITC, millions more miss out because they don’t know about it or don’t realize they’re eligible. We encourage people to look into whether they qualify.”

However, taxpayers who claim the EITC and another refundable tax credits, the Additional Child Tax Credit, could face some delays in receiving their tax refunds, the IRS acknowledged (see IRS updates tax pros' guide for refund expectations). Congress approved legislation last year requiring the IRS to hold refunds claiming the EITC and the ACTC until February 15, to give the IRS extra time to authenticate taxpayers as a safeguard against identity theft and tax fraud. By law, the IRS has to hold onto the entire refund—even the portion not associated with EITC or ACTC—before releasing it.

Taxpayers can get their refunds sooner by choosing direct deposit. The IRS said it will start releasing those tax refunds on February 15. However, taxpayers should not expect to see the refunds deposited into their bank accounts until the week of February 27, as long as there are no processing issues with the tax return.

The IRS plans to update its online Where's My Refund? Tool on IRS.gov and the IRS2Go mobile app with the projected deposit dates for early EITC and ACTC refund filers a few days after February 15.

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.