Each year, the vast majority of taxpayers receive some sort of refund upon filing their tax returns, and 2018 will probably be no exception. The good news is that the IRS will begin accepting tax returns as early as January 29 this year, at which point it expects most refunds to go out within three weeks. But even if you rush to get your documentation in order and get that return filed early next week, you might still end up waiting on your refund if you claim either the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC).

Blame it on tax fraud

The EITC and ACTC are credits specifically designed to help lower-income households. Now as a reminder, a tax credit is a dollar-for-dollar reduction of your tax liability. Whereas a deduction merely exempts a portion of your income from taxes, a credit shaves money directly off your tax bill.

Tax Refund Ahead road sign


What's interesting about both the EITC and ACTC is that these credits are refundable, whereas most credits are not. If you claim a non-refundable credit, the most it can do is reduce your tax liability to $0 so that you're not paying any money to the IRS, but also aren't getting anything back. But that's not the case with the EITC and ACTC -- both can result in the IRS owing you money, which is also why these credits are particularly subject to fraud and abuse.

And that's where the PATH Act comes in. Short for Protecting Americans from Tax Hikes, the PATH Act was passed in late 2015 and sets forth provisions to help reduce tax fraud -- tax fraud that can end up costing the public. One such provision is that all refunds associated with both the EITC and ACTC must be withheld until mid-February to comply with the law. This means that if you're claiming one of these credits, the earliest you can expect your money is February 27, 2018, and that's really in a best-case scenario.

Furthermore, you should know that if your refund is only partially attributable to either credit, the IRS must still withhold it in its entirety. In other words, say you're due a $4,000 refund, $3,000 of which stems from the EITC and $1,000 of which comes as a result of having had too much money withheld from your paychecks during the year. Even though that last $1,000 has nothing to do with the EITC, the IRS can't split your refund up, so you'll need to wait until the very end of February or later to get your money.

Ways to get your refund faster

Even though there's no way to get your money sooner than late February when claiming the EITC or ACTC, there are still things you can do to avoid further delays. For one thing, check your return for errors and omissions. Entering the wrong Social Security number, for example, could cause it to get rejected completely. Secondly, file your return electronically rather than on paper, since this will effectively cut your refund turnaround time in half. Finally, sign up for direct deposit rather than ask for a check in the mail. This way, you're not at the mercy of the postal service, and the IRS can get you those funds sooner.

Both the EITC and ACTC can put quite a bit of money back in your pocket. Just be prepared to have your refund delayed if you file your return early on.