IRS warns tax refunds delayed for low-income Americans

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If your refund is delayed this year, you can thank the IRS — and identity thieves.

Millions of low-income Americans who rely on their annual tax refund to help pay their bills are going to have to wait a few weeks longer to get their check this year as the agency cracks down on fraudsters.

The delays impact 40 million working poor families claiming the earned income tax credit and the additional child tax credit.

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For 2016, the maximum earned income tax credit is from $506 for no qualifying children to $6,269 for three or more qualifying children.

"For most of these people it's the biggest check they are going to get all year," IRS Commissioner John Koskinen told the Associated Press in an interview. "We are sensitive to that."

Under the 2015 PATH Act that goes into effect this year, the IRS must delay these refunds to have more time to screen the returns. Scammers and organized crime syndicates have been filing fraudulent returns and claiming tax payers refunds before they have a chance to file, according to the IRS.

The agency has been reminding taxpayers and prepares about the change in news releases since this summer.

Tax filing starts January 23. The IRS says most direct deposit e-filers usually receive their funds within 21 days. So those filing on day one might see their refund by mid-February. But now the additional processing time will delay those refunds until the end of February, Koskinen said.

See a guide to the most commonly used tax forms:

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Guide to commonly-used US tax forms
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Guide to commonly-used US tax forms

The 1040 family of tax forms is for federal income tax and is absolutely essential for all.

The 1040EZ form is the simplest version and is typically filed by those who:

  • Have no dependents
  • Are younger than 65
  • Earned less than $100,000
  • Don’t plan to itemize deductions

Form 1040A is more comprehensive than 1040EZ, but simpler than the regular 1040. It's beneficial for those who earn less than $100,000 and don’t have self-employment income -- but who want to make adjustments to their taxable income, such as child tax credits or deductions for student-loan interest. Note that it doesn't allow for itemized deductions.

Form 1040 is filled out by those who make $100,000 or more, have self-employment income or plan to itemize deductions.

The W-2 is completed by employers document each employee's earnings for the calendar year. You will want to take a look at this tax form for important information you'll need to fill out your 1040, 1040A or 1040EZ. 
The 1098 form is filled out by those who:
  • paid interest on a mortgage
  • paid interest on a student loan 
  • paid college tuition
  • donated a motor vehicle to charity

The 1099 series is reports all income that isn’t salary, wages or tips, and must be reported on both the state and federal level.

1099-DIV reports dividends, distributions, capital gains and federal income tax withheld from investment accounts, including mutual fund accounts.

1099-INT trakcs interest income earned on investments.

1099-OID (Original Issue Discount) is provided if you received more than the stated redemption price on maturing bonds.

1099-MISC documents self-employment earnings, as well as miscellaneous income such as royalties, commissions or rents. It covers all non-employee income that is not derived from investments.

If you receive a refund that you're unable to pay in full, you can request a monthly installment plan using Form 9465.
Don't forget to notify the IRS if you move! Use Form 8822 to change your address with the Internal Revenue Service. Otherwise, notices, refunds paid with a paper check and other correspondence relating to your personal, gift and estate taxes will be sent to your former address.
Anyone who has been employed by a company has completed a Form W-9. The W-9 is used by employers for payroll purposes -- and the information on the W-9 is used to prepare employee paychecks during the year and W-2 forms at the end of the year. 
The W-4 is an IRS form completed for employers know how much money to withhold from your paycheck for federal taxes. Accurately completing your W-4 can both ensure you don't have a big balance due at tax time and also prevent you from overpaying your taxes.
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