MILLIONS of households will have to wait until the end of February for tax refunds – even if they file early.

It comes as the Internal Revenue Service (IRS) today kicked off the 2023 filing season by opening for returns.

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Households claiming certain credits will have to wait longer for tax refunds[/caption]

Refunds typically take around 21 days to be paid out, if you’ve opted for direct deposit.

You’ll usually also have needed to file your return electronically and without any errors.

However, if you’re claiming earned income tax credit (EITC) or additional child tax credit (ACTC) as part of your return before mid-February, you’ll need to wait a bit longer.

This is due to the PATH Act law passed by Congress in 2015, which provides additional time to help the IRS stop fraudulent refunds from being issued.

Instead, the IRS expects most EITC/ACTC related refunds to be available to taxpayers by February 28 in 2023.

Again, this assumes that taxpayers chose direct deposit and there are no other issues with their tax return.

Filers who want to get an idea of their expected payment date can use the IRS’ Where’s My Refund tool.

The deadline to file your federal tax return in 2023 is on April 18, unless you request an extension.

WHAT IS THE EITC?

The EITC is the government’s largest refundable federal income tax credit for low to moderate-income workers.

In 2021, almost 25million families received over $60billion in EITC credits, with an average payment of $2,411.

For the 2022 tax year, the EITC is worth as much as $6,935 for a family with three or more children.

Workers without children can claim a maximum of $560 for 2022, down from $1,502 in the 2021 tax year.

You qualify if you work and earn below a certain maximum adjusted gross income (AGI), which we’ve rounded up below:

Filing as single, head of household or widowed

  • No children – AGI of $16,480
  • One child – AGI of $43,492
  • Two children – AGI of $49,399
  • Three children – AGI of $53,057

Filing as married filing jointly

  • No children – AGI of $22,610
  • One child – AGI of $49,622
  • Two children – AGI of $55,529
  • Three children – AGI of $59,187

What is the ACTC?

Families can get up to $2,000 per child in child tax credits to reduce the taxes owed to the IRS.

This applies as long as they’re younger than 17 at the end of the tax year, are claimed as a dependent and live with you for more than half of the year.

If your available CTC is greater than your tax liability, it can only reduce your tax bill to zero — in other words, you don’t get any unused portion of the credit back as a refund.

However, you may be able to claim the ACTC, which is the refundable portion of the credits.

This is worth up to $1,500 for each qualifying child.

The value of both CTC and ACTC starts to decrease if your gross incomes exceed $200,000 or $400,000 for married couples filing jointly.

The federal child tax credits were temporarily boosted in the American Rescue Plan for the 2021 tax year only.

It increased the payments to up to $3,600 per child and made the credits fully refundable too.

However, they’ve since been reverted meaning many households now face smaller refunds this year.

Meanwhile, some states are offering their own version of the CTC.

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