Table of Contents
- What Is the Protecting Americans From Tax Hikes (PATH) Act?
- Key Takeaways
- Understanding the PATH Act
- Special Considerations
- Child Tax Credit
- Earned Income Tax Credit
- Earned Income Tax Credit and Additional Child Tax Credit
- New and Extended Tax Provisions in the PATH Act
- Extension of the Work Opportunity Tax Credit
- Wrongful Incarceration Exclusion
- Renewal of Individual Taxpayer Identification Number (ITIN)
- Tax Policy Today
- Who Qualifies for the EITC?
- What Is the Difference Between the ACTC and the CTC?
- Is the PATH Act a Good Thing?
- The Bottom Line
What Is the Protecting Americans From Tax Hikes (PATH) Act?
Let me tell you about the Protecting Americans From Tax Hikes (PATH) Act of 2015—it's an Obama-era law that expanded or renewed several tax credits for individuals, families, and businesses, and it put in place measures to stop fraudulent claims. This act is still in force today.
If you're eligible for certain tax credits, this act affects you directly. For instance, if you're filing for the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC), you need a Social Security number or a valid Individual Taxpayer Identification Number (ITIN). Remember, if your ITIN hasn't been used in a tax filing for the previous three years, it's invalid, and you'll have to get a new one.
Also, refunds including these credits aren't issued before February 15 each year—that gives the IRS time to check for fraud.
The PATH Act renewed about 50 temporary tax breaks for individuals and businesses that had expired, and it made the Child Tax Credit (CTC) and the EITC permanent.
Key Takeaways
Here's what you need to know: The PATH Act renewed and expanded several tax credits and set up procedures to stop fraud against the government.
It made the CTC and EITC, which started as temporary breaks for families, permanent.
The act retroactively extended the Work Opportunity Tax Credit for employers hiring from groups facing employment barriers.
It also renewed around 50 tax breaks for individuals and businesses.
Understanding the PATH Act
The PATH Act targeted tax credits for individuals, families, and businesses—it extended some permanently and broadened eligibility for others.
You should understand that a tax credit is generally more valuable than a deduction because it reduces your taxes dollar for dollar, while a deduction just lowers your taxable income.
Some credits are refundable or partially refundable, meaning if you're low-income and owe little or no taxes, you might get a check from the IRS for part or all of the credit.
Special Considerations
Tax credits are prone to fraud, where ineligible people try to claim them or scammers prey on those who qualify—this has been a big issue with the CTC and EITC.
Child Tax Credit
The CTC was expanded during the COVID-19 pandemic to help families, providing up to $300 per month per child through 2021 for those below certain income levels.
Eligible people got payments automatically if the IRS had their info, but very low-income folks who didn't file taxes had to sign up online.
This created openings for scammers pretending to be IRS agents, contacting people via text, email, phone, or social media to steal personal info.
Fraud also happens when filers underreport income or fake dependents to qualify.
Importantly, the CTC went back to pre-pandemic levels in 2022 and gets adjusted for inflation each year.
Earned Income Tax Credit
Another fraud target is the EITC, worth $632 to $7,830 yearly for low- and moderate-income people, with more for families with kids.
Fraud can involve falsifying earned income or the number of children on a return.
The IRS warns that scammers target CTC-eligible people to steal money—don't share personal or financial info with anyone claiming to be from the IRS.
Earned Income Tax Credit and Additional Child Tax Credit
The PATH Act didn't change the filing process for these credits—in most cases, expect your refund within 21 days.
But if you file early with EITC or ACTC, the IRS holds the refund until February 15 to spot fraud and stop identity thieves.
EITC is for low- and medium-income individuals and families, scaling with the number of children. The full ACTC applies to families under $200,000 ($400,000 joint), decreasing above that.
If these credits don't apply to you or you file after February 15, the PATH Act won't delay your refund.
Note that for 2024, EITC caps at $632 for childless households, rising to $649 in 2025.
New and Extended Tax Provisions in the PATH Act
The PATH Act renewed expired tax laws and added new ones for individuals and businesses, extending deductions like tuition, charitable contributions, and residential energy credits retroactively.
Extension of the Work Opportunity Tax Credit
Employers can get the Work Opportunity Tax Credit (WOTC) for hiring from groups with employment barriers.
The PATH Act extended it retroactively to hires from January 1, 2015, covering nine worker categories plus long-term unemployed starting in 2016.
Wrongful Incarceration Exclusion
Under the PATH Act, exonerated individuals can exclude monetary awards from wrongful incarceration from their earned income.
It also gives them time to file refund claims for prior-year restitution or damages—sometimes called a 'PATH Act Refund'.
Renewal of Individual Taxpayer Identification Number (ITIN)
ITINs are for taxpayers without SSNs, mostly foreign citizens earning U.S. income.
The PATH Act requires renewing an ITIN if unused for three years—get one via Form W-7 by mail, IRS office, or authorized agent.
Using an expired ITIN could delay your refund or make you ineligible for credits.
Tax Policy Today
The PATH Act has been overshadowed by newer laws, especially on tax credits like the CTC.
The American Rescue Plan in 2020 expanded the CTC for pandemic relief, but it expired end of 2021.
Biden's Build Back Better bill aimed to expand it further but stalled in the Senate after House passage.
The Inflation Reduction Act of 2022 replaced it but didn't include the expanded credit.
Who Qualifies for the EITC?
To qualify for EITC in 2024, single filers or similar with no kids have an income limit of $18,591 ($25,511 joint); for 2025, it's $19,104 and $26,214. Limits rise with qualifying children, plus other criteria like investment income caps.
What Is the Difference Between the ACTC and the CTC?
The ACTC is the refundable part of the CTC—it's what families can claim if they owe less than their qualified CTC amount.
Is the PATH Act a Good Thing?
The PATH Act helped lower-income taxpayers, added fraud protections, and made positive changes to other tax issues.
The Bottom Line
The PATH Act of 2015 expanded and renewed tax credits for individuals, families, and businesses while adding safeguards against fraud.
It addressed vulnerabilities from scammers targeting families and ineligible claims—the act is still active today.
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