Taxes 2022: The neediest Americans must wait longer for tax refunds

Some of the neediest Americans won't get their tax refund until at least March — no matter how early they file their taxes. The wait comes as many struggle after the monthly Child Tax Credit (CTC) payments expired.

“Families are really going to be counting on this refund after having that regularity [of the CTC payments] lapse,” said Joanna Ain, associate director of policy at Prosperity Now, a nonprofit that advocates for low-income Americans. “These are the low-income families we’re concerned about.”

Read more: Taxes 2022: Important changes to know for this year's tax season

By law, the Internal Revenue Service can’t issue tax refunds that are based partially or fully on the Earned Income Tax Credit (EITC) until mid-February. The EITC is largely aimed at lower-income filers with children — many of the same ones who benefited from the advance CTC payments.

The IRS said the earliest that EITC tax refunds will hit taxpayers' bank accounts or prepaid debit cards is by the first week of March.

Why is there a tax refund delay?

The PATH Act passed in 2015 required the IRS to hold refunds until Feb. 15 if the return claimed the EITC or the Additional Child Tax Credit (ACTC) to give the agency time to match the information on the tax returns to information supplied by employers.

“The goal was to prevent theft and fraud,” Ain said. “But we know the reason the focus is on EITC recipients unfortunately is … it’s easier to prosecute an EITC recipient than a wealthier taxpayer who has access to lawyers and accountants.”

Read more: Some Americans could see smaller-than-expected tax refunds this year

Often discrepancies related to an EITC refund are “unintentional mistakes,” Ain said, because the EITC rules are complex.

But the consequences of a delay can be significant, largely because a tax refund is often the biggest financial windfall of the year for many folks. It could be even more crucial now that the monthly installments of the CTC enacted by the American Rescue Plan stopped in December after Congress failed to extend the credit’s expansion.

“The delay is somewhat gratuitous,” Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities, told Yahoo Money.

How to prevent your tax refund from being delayed

While taxpayers can’t do anything about that Feb. 15 mandate if they claim the EITC, they can take other steps to ensure their tax refunds are not delayed further.

First, make sure to file your taxes as early as possible. This year, look out for two new letters from the IRS — Letter 6475 and Letter 6419 — to reconcile the stimulus check and CTC payments you received this year. You’ll need both to file your taxes accurately.

Read more: IRS warns of inaccurate tax forms for the Child Tax Credit

If you need help with your taxes, seek out free tax preparation services such as the Volunteer Income Tax Assistance programs (VITA), which uses tax volunteers certified by the IRS every year to prepare taxes for certain eligible individuals, including those who make $54,000 or less a year.

“It’s a well-established program that’s been around for over 50 years. It has such a high accuracy rate — 94%,” Ain said. “It’s equipped to help folks with these really important tax credits.”

Families with internet access can also go to getyourrefund.org, another free service for low-income families that works with VITA to help prepare taxes.

Last, choose direct deposit for your refund.

“That will ensure money will come to them earlier rather than later,” Ain said.

Janna is the personal finance editor for Yahoo Money. Follow her on Twitter @JannaHerron.

Read the latest personal finance news, trends, and tips from Yahoo Money.

Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn