Many families who claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) file as soon as the season opens, only to see their refund status stuck for weeks while friends who filed later are already paid. This is not a mistake on their return. It is the result of a federal law that deliberately holds these refunds for a short period.
What the PATH Act requires
The Protecting Americans from Tax Hikes Act of 2015, usually called the PATH Act, says the IRS cannot issue refunds for returns that claim the EITC or the ACTC before mid-February. Two details surprise people:
- The hold applies to the whole refund, not just the part that comes from the credit. If your return claims either credit, all of your refund waits.
- Filing earlier does not get you past the hold. Returns filed in January are processed, but the refund cannot be released until the legal date has passed.
Why the law holds these refunds
Refundable credits such as the EITC and ACTC can produce a refund larger than the tax a person paid, which makes them a target for fraud and identity theft. The hold gives the IRS time to receive employers' wage statements (Forms W-2) and compare them with the income people report, so it can catch fraudulent returns before money goes out. The intention is to protect both taxpayers and public funds.
When to expect your refund
After the hold ends, the IRS begins releasing these refunds, and they then take a few days to move through the banking system. In recent seasons the IRS has said that most early filers claiming these credits who chose direct deposit and had no other issues could expect their refund around the start of March. The exact timing changes each year, so check IRS.gov early in the season for the current estimate.
The IRS "Where's My Refund?" tool is the best way to follow your return. For returns covered by the PATH Act, it typically shows a projected deposit date once the hold is close to ending; before then it may show only that the return was received.
Things that can add more delay
The PATH Act hold is predictable. Additional delays usually come from something else on the return:
- Mismatched information: wages that don't match an employer's W-2, or a dependant claimed by more than one person.
- Missing or incorrect identification numbers for you, your spouse or your children.
- Identity verification: if the IRS sends a letter asking you to confirm your identity, the refund waits until you respond.
- Previously disallowed credits: if the EITC or a child credit was denied in an earlier year, you may need to file Form 8862 before claiming it again.
- Paper returns and paper checks, which take longer at every step.
Planning around the wait
Because the hold is predictable, it is possible to plan for it:
- Budget as if the refund arrives in March, not January.
- Think carefully before taking a refund advance to bridge the gap. Some advances are offered with no interest, but they are often tied to a paid bank product, and if the refund is reduced or delayed you may still be responsible for repayment terms in the agreement.
- Use free filing help. IRS-sponsored VITA sites specialise in returns that claim the EITC and can help you avoid the errors that lead to longer delays.
- Choose direct deposit into an account in your own name so the refund arrives as soon as it is released.
Should you avoid claiming the credit to get paid sooner?
Almost never. Leaving out a credit you qualify for to speed up a refund means giving up money you are entitled to. If you realise later that you were eligible, you can generally claim it on an amended return, but that takes longer still. It is usually better to file a complete, accurate return and plan for the hold.
This article is general information, not tax advice. TaxRefund4Cash is not a tax preparer or lender and is not affiliated with the IRS. Check current dates and rules on IRS.gov.