PATH Act 2018: Impact On Your Taxes

December 19, 2017 : Diamond Lambert

The Protecting Americans from Tax Hikes or PATH Act was passed in late 2015. Many U.S. citizens are affected by the PATH Act to some extent. This law helps to protect individuals and their families from the risk of tax fraud.

Recently, the IRS has announced that they will begin issuing refunds starting mid-February. It’s likely that you won’t see your federal refund appear in your bank account until February 27th (via direct deposit) or later.

Let’s explore how the PATH Act may affect your taxes when filing in 2018.

Possible Refund Delays for Early Filers

If you are an individual who claims the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) you may be first in line for delayed returns.

Tax fraud crimes have been on a recent uptick and to safeguard your refund, the IRS has adopted a policy to not release refunds until after February 15th. This gives the IRS time to stop payment release of any false filings under your identity, thus protecting your refund.

ITIN Changes and Renewals

Since October of 2016, the PATH Act sparked a need for a population of taxpayers to renew their Individual Taxpayer Identification Number (ITIN).

The PATH Act requires that any ITIN’s that have not been used on a federal tax return at least once in the last three years will no longer be valid. That means responsibility is passed to the tax payer keep their own ITIN up-to-date.

Those who have an ITIN are typically not eligible for a Social Security Number. If you are an individual holding an ITIN with the middle digits 70,71,72, 78, 79 or 80, you may have recently received a letter from the IRS. This letter is a friendly reminder to keep your ITIN number up-to-date before tax season.  For more details regarding your ITIN, visit this page.

The New Wrongful-Incarceration Exclusion

If you are an individual who was wrongfully incarcerated, the PATH Act extends a special one-year window for you to file a refund claim.

This claim can be based on any of the following:

  • Civil damages (loss, detriment, injury, or unlawful conduct)
  • Restitution (reparations for wrongdoings)
  • Other monetary awards received

According to the PATH Act, even if the typical statute of limitations has expired for the year, you may still be able to file under the new legislation.

For additional IRS news and up-to-date PATH Act updates, visit the Newsroom at irs.gov.

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Form 1099-G, Certain Government Payments

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Diamond Lambert

Diamond Lambert

Diamond Lambert, M.Sc., is a marketing manager within the advertising and brand team. She is a graduate of Franklin University holding a master's degree in marketing and mass communications. Her contributions include a mix of IRS tax news, lifestyle pieces, and consumer information.