The Protecting Americans from Tax Hikes Act, aka the PATH Act, is a new law that was designed to protect taxpayers against tax fraud. The law was passed in December of 2015 and it extended some expiring tax provisions, made some expiring provisions permanent, and created new one provisions. This means that you might notice some differences when you’re filing your taxes, including when you need to file your forms and when you will receive your tax refund. But what changed with the PATH Act? Read on to see all the major changes that could affect you.

Understanding the Big Tax Changes of the PATH Act

For Employers:


Previously, employers had to send their employees their copies of their W-2s and W-3s by the end of January but they had more leeway when it came to sending these same records to the IRS. But now employers are required to file their copies of Form W-2 and Form W-3 with the Social Security Administration by the end of January. This new deadline also applies to certain Forms 1099-MISC for reporting non-employee compensation to independent contractors. Meeting this new deadline is a must for employers— failure to file these forms timely and correctly could result in penalties.

For Anyone Claiming the Earned Income Tax Credit:


In the past, anyone with a Social Security number could claim the Earned Income Tax Credit, even retroactively for years in which they did not have an SSN. Now, this retroactive claiming can no longer be done.

It’s also more important than ever to make sure you actually qualify for the EITC before trying to claim it. Now, the IRS will assess a penalty if they determine you did not quality but still tried to claim the credit. Plus, if you are found to have falsely claimed this credit, you may not be able to claim it again for up to 10 years in the future.

For Anyone Claiming the Additional Child Tax:


If you qualify for the Additional Child Tax Credit, the PATH Act’s new ACTC provisions are good news. Now, eligible families can get a significant tax break from the credit, up to 15% of their total income past an initial amount of $3,000.

For Early Filers Claiming the EITC or ACTC:


Under the new tax laws, if you file your taxes early and claim the Earned Income Tax Credit and/or Additional Child Tax Credit, you will have to wait a bit for your tax refund. Now, no tax refunds with these specific credits claimed will be sent until February 15th. And the reasoning behind this new law? It’s to give the IRS enough time to stop tax fraud caused by identity thieves and those making fraudulent claims. So, if you want to get a refund before February 15th, you can’t have claimed these particular credits.

The PATH Act and Filing Your Taxes


If you’re unsure of how the changes due to the PATH Act will affect you, or if you are unsure about whether or not you qualify for the EITC or ACTC, you can always consider having your taxes professionally filed. Getting your taxes filed by an expert ensures that you won’t make any mistakes on your return and that you’ll take full advantage of every credit or exemption you are qualified for. Our experts at Vanguard Tax Relief are fully up to date with every aspect of the PATH Act changes, as well as all other tax laws for the 2017 tax year. If you’re concerned about how the new tax laws affect you, don’t wait— contact us today and get your best possible tax return. And if you’re an employer, make sure you contact us before the end of January so you can ensure all your 2017 documents are correctly and promptly filed with the IRS.