IRS Reminds Americans on When to Expect Earned Income Tax Credit Refunds

The IRS building in Washington on March 25, 2024. Madalina Vasiliu/The Epoch Times

Americans who filed their tax returns and claimed the Earned Income Tax Credit (EITC) should expect to receive these refunds next month, according to the IRS.

Most refunds for EITC and Additional Child Tax Credit (ACTC) “should be available in bank accounts or on debit cards by March 3 if there are no issues with a taxpayer’s return and they chose to receive their refund by direct deposit,” the agency said in a Jan. 31 statement.

The IRS’s Where’s My Refund? tool, which allows taxpayers to monitor refund status, will be updated with “projected deposit dates for most early EITC/ACTC refund filers by Feb. 22.”

Signed into law in 1975, EITC provides tax breaks for low- to moderate-income workers and families. Qualified taxpayers can use the credit to reduce taxes and potentially boost their refunds. EITC is available for taxpayers with or without children.

During tax year 2023, eligible taxpayers received $2,743 in EITC on average. Taxpayers can use the IRS “EITC Assistant” online tool to check their eligibility for the tax credit.

For the 2024 tax year, individual taxpayers without children are qualified for EITC if their incomes do not exceed $18,591. The income limit rises to $49,084 for taxpayers with one child, $55,768 for two children, and $59,899 for three or more children.

For married couples filing jointly, the limits range from $25,511 to $66,819.

“Eligible workers between the ages of 25 and 64 who have no dependents may receive up to $632 by claiming the EITC, while married but separated spouses who do not file a joint return may qualify for the EITC if they meet certain requirements,” the IRS said.

“Those with qualifying children can receive a maximum of $7,830 when claiming the EITC for tax year 2024, up from $7,430 in tax year 2023.”

The IRS has made a change related to dependents on tax forms that will be in effect starting this filing season. The change involves multiple taxpayers claiming the same individuals as dependents on their tax forms.

The agency processes tax returns in the order it receives them. If the IRS has already processed a return involving certain dependents, it will reject another return seeking to claim the same individuals.

However, beginning from the 2025 filing season, e-filed returns claiming dependents who were previously claimed in another return will be accepted by the agency as long as the second return includes a valid Identity Protection (IP) PIN.

“This change will reduce the time it takes for the agency to receive the tax return and accelerate the issuance of tax refunds for those with duplicate dependent returns. In previous years, the second tax return had to be filed by paper,” the tax agency said.

“Taxpayers who do not have IP PINs will have their e-filed returns rejected if one of their dependents has already been claimed by another taxpayer.”

Expanding EITC, Dealing With Improper Payments

Late last month, Rep. Bonnie Watson Coleman (D-N.J.) reintroduced the EITC Modernization Act aimed at benefiting low- and middle-income families.

The bill seeks to expand EITC eligibility to caregivers as well as independent students who pursue higher or vocational education.

The proposed regulation seeks to create an option allowing EITC recipients to receive their benefits on a monthly basis.

“Honest, hard-working families pay a far greater share of their total wealth in taxes, supporting the public services that all Americans—rich or poor—benefit from,” Coleman said.

“It’s an injustice that’s gone on far too long. That’s why I’m introducing the EITC Modernization Act to give working-class families the relief they deserve.”

Meanwhile, dealing with improper payments related to EITC is an ongoing challenge facing the IRS, according to a May report from the agency watchdog Treasury Inspector General for Tax Administration.

The IRS has a goal of reducing the rate of improper payments at four of its “high-priority” programs to less than 10 percent, with EITC being one of these programs.

However, the tax agency failed to achieve the target during fiscal year 2023, the report said.

EITC had an improper payment rate of 33 percent, the highest among the four programs. Out of the $65.4 billion in EITC claims, $21.9 billion were found to be improper payments.

The Treasury estimated that improper payment rates in EITC ranged between 22.8 and 33.5 percent over the 17-year period between fiscal years 2006 and 2023.

“This is despite the IRS’s efforts to reduce these rates,” the report said.