January 30, 2019 - Douglas Myser

Tax refunds this winter unlikely. It's unfortunate that the IRS has been furloughed, because an awful lot of low income households rely on the Earned Income Credit to help them get through the winter. With the holidays behind them, millions of americans are putting a new priority on the calendar: getting caught up on the heating bill. Since most states have laws prohibiting utilities from disconnecting the gas during the winter households struggling to juggle their expenses sometimes let this one lapse. When the new year arrives, so does help, in Earned Income Tax Credit for a vital infusions of cash after the holiday season. More than 25 million americans, low and moderate income tax filers claimed the EITC last year--a total of 18 percent of all tax returns. In 2018, these tax filers saw an average return of $2488--which helps to explain why households claiming EITC are among the earliest to file their taxes each year. Tax refunds this winter unlikely.

Tis year may be different, thanks to the ongoing federal government shutdown. While the Trump Administration has pledged that the Internal Revenue Service will still issue tax refunds, recent changes to the tax code will make that promise difficult to keep, especially with regard to these critical refunds. As the shutdown stretches on, people who depend on the EITC for relief may face serious hardship. "Although the federal government has indicated they want to send out refunds on time, it's questionable to me whether that's a realistic goal, says Elaine Maag, a Senior research associate at the Urban-Brookings Tax Policy Center at the Urban Institute. For those hoping to pay down tax debt with the tax refunds, you can contact a Tax Resolution firm for Tax Relief options, including the IRS Fresh Start Program

Changes to the IRS tax code passed as part of the Protecting Americans from Tax Hikes Act of 2015 require the IRS to delay issuing tax refunds for filers who claim either the EITC of the Additional Child Tax Credit. This delay enables the IRS to verify wage date for families filing the EITC or ACTC refunds.