PATH Act 2024

Protecting Americans from Tax Hikes (PATH Act) is an important piece of legislation that helps to reduce identity theft and individual tax return fraud. It also gives the IRS more time to examine claims for certain tax credits. This allows the IRS to catch fraudulent claims by individuals not eligible for these tax credits or con artists who try to steal money from those who do. 

To help combat fraud, the PATH Act extended the time that the IRS can take to review tax returns that claim the Earned Income Tax Credit or Additional Child Tax Credit before a refund is issued. This extra time allows the IRS to review a tax return and prevent fraudulent claims that can result in large refunds for those who may not be eligible for the credit.

 PATH Act Notes

• PATH Act permanently raises the income phase-out threshold for the Earned Income Tax Credit to $3,000 from $1,000. It extends the Work Opportunity Tax Credit, a credit that supports businesses that hire individuals with barriers to employment. This great change should increase the number of Americans who qualify for these credits.
• The PATH Act also required that all businesses transmit all Forms W-2, W-3, 1099, and 1096 no later than the January 31 due date, which is good because it allows the IRS more time to verify the information and combat fraud. This is a big improvement from previous years, where employers did not submit W-2s until February 15.
• There are certain taxpayers who may be affected by the PATH Act. These include those who claim the Earned Income Tax Credit or the Additional Child Tax Credit and those who file Form 1040 with a value on Line 27 or 28.
• These taxpayers can see the Path message on their Where’s My Refund when they check their tax return status online. This is normal at this stage of the tax season, but it is not something to be concerned about. However, if you see the Path Act hold message on your refund in mid-February, that means that the IRS is still holding it due to issues with the payment. Eventually, this will lift and the IRS can release your refund. This delay is normal and there is no need to panic, but it is important to know when this will happen and what to expect. The best way to stay up-to-date on your refund is by checking your status using the Where’s My Refund tool.
• Finally, the PATH Act made it easier for employers to claim a credit on their tax forms for hiring employees from groups that have faced barriers to employment in the past. This means that employers who hire workers from groups such as immigrants, the disabled, the elderly or people in prison can now claim this credit for their payroll tax.

This is good news for businesses as it can save them time and money by not paying taxes on employees who are not eligible for this credit. While there are a few other minor changes to the PATH Act, these are the most significant and impact taxpayers the most. If you are unsure whether or not the PATH Act has affected you, you should contact an official at WMR. They can help you get the most out of your next tax filing season.