5 Facts About the PATH Act – Master of Accounting Degrees

If you’re like most taxpayers, you’ve probably heard of the PATH Act but don’t know too much about it and its impact. With the tax filing process becoming more and more intimidating and arduous each year, it’s essential that you understand the ins and out of the process and what this Act means for you. This list of 5 facts can help you understand this Act and its possible impact on your taxes.

1. The Act Was Passed For Your Protection

According to the IRS, the Protecting Americans from Tax Hikes (PATH) Act was initially enacted in December of 2015. The Act contains changes to tax laws that affect most people who file their taxes each year and was created to help safeguard tax payers. These special provisions help the IRS verify your information in an effort to prevent fraud and identity theft. With the threat of fraud and identity theft ever-growing in today’s world, this ACT holds safeguards within in to protect taxpayers.

2. This Act does not Impact Filing

When you hear about some new tax act, you probably think you need to do something differently. In this case however, that is not true. You file your taxes the exact same way you would have every other year. The provisions in this act do not affect your filing, just the amount of time it may take to get your refund. This act may not even impact some filers at all, as it is directed at certain types of filers. Just as before, you can begin filing your taxes in January and the deadline for filing your federal return remains April 15th.

3. Who does this Act Affect?

According to H&R Block, around 30 million taxpayers each year claim the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). These people are the ones most affected by this protective act. These people will not find the process more difficult than before, but may wait longer for their returns. This Act mandates that if you are claiming either of these credits, the IRS will not issue refunds on your tax return until February 15th. This extra time is allotted to allow the IRS to verify your information and help protect you from fraud.

4. Your ITIN Could Change

This fancy acronym is just your Individual Taxpayer Identification Number. Under the provisions of this Act, if your ITIN has not been used on your federal return in the last 3 years, it is no longer valid unless you personally renew it. Those people who use an expired ITIN could face refund delays or be ineligible for tax credits. This provision helps prevent identity theft and fraud by ensuring the use of your ITIN is yours and yours alone.

5. Employers Could Take Advantage of Credits

The Work Opportunity Tax Credit (WOTC) was created to give employers tax credits for hiring people from certain target groups that have faced significant barriers to employment. The PATH Act extended the WOTC for 9 different categories of workers in the first year and added a tenth one (veterans) in its second year. If you’re an employer and you have hired employees that fit into certain categories, this Act could help you find some tax relief.

With so many rules and regulations regarding tax season, sometimes it can be hard to wrap your mind around it all. This list of 5 facts about the PATH Act, created to protect you, will hopefully set your mind at ease and reduce your stress about everything tax-related.