IRS tax refund
Missing the April deadline can trigger penalties that quickly eat into any expected refund.

You've probably seen the number. It is everywhere right now — across TikTok, in Facebook groups, on every personal finance blog with a search ranking to protect. File your taxes, get $1,700 back. Sounds brilliant.

Except that isn't quite what's happening.

The $1,700 refers to one specific thing: the refundable chunk of the Child Tax Credit, known officially as the Additional Child Tax Credit. If your CTC — worth up to $2,200 per kid since the One Big Beautiful Bill Act bumped it up last July — is more than you owe in federal tax, the IRS will send you the leftover. Up to $1,700 per qualifying child. That's the IRS's own number, confirmed for the 2025 tax year.

So far, so fine.

But here's the thing nobody seems to want to put in their headline: there is another credit, aimed at the same families, that is worth nearly five times as much. And it barely gets a mention.

The Credit That Actually Pays

The Earned Income Tax Credit for a family with three or more kids maxes out at $8,046 this year. Two kids? Up to $7,152. One child, $4,328. No children at all — and yes, you can claim it without children, which most of the viral posts don't bother to tell you — the ceiling is $649, which isn't life-changing but isn't nothing either if you're earning $18,000 a year and every dollar matters.

Both credits are refundable. You can claim both at once. They don't cancel each other out. A low-income family with two children who files everything properly could, on paper, get the EITC plus up to $3,400 in ACTC refunds on top. That's closer to $10,000 than $1,700, and it frustrates me a bit that the smaller, tidier number is the one doing the rounds.

$1,700 fits better in a headline. Fair enough.

The Age Thing Is Wrong Everywhere

This is the error that is genuinely worrisome, because it could cost people money.

There are reports that state that your child needs to be 'under 17' to qualify. That is true for the Child Tax Credit. It is not true for the EITC, which has its own rules, and they're more generous. For the Earned Income Tax Credit, a qualifying child can be under 19 at the end of the tax year. Or under 24, if they're a full-time student. Permanently disabled children have no age cap at all.

Think about what that means in practice. You have an 18-year-old finishing sixth form — sorry, finishing high school, this is America — and you've read three articles telling you the age cutoff is 17. You don't claim the EITC. You lose potentially thousands of dollars. Because somebody copied the CTC rule and applied it to both credits without checking, and then everybody else copied them.

Get it right: under 17 for the CTC. Under 19, or under 24 if studying, for the EITC.

When the Money Lands — and Why It's Not Late

The PATH Act — passed years ago to combat fraud — requires the IRS to hold all refunds that include the EITC or Additional Child Tax Credit until mid-February. The whole refund, not just the bit linked to those credits. It does not matter if you filed on the first day of tax season in January. You are waiting until at least mid-February regardless, and most people with direct deposit won't see the money until the first week of March.

The IRS's 'Where's My Refund?' tracker starts updating around 21 February. Paper filers — and I genuinely don't know why anyone still files on paper in 2026, but here we are — should expect considerably longer.

The Penalty Everyone Gets Wrong Too

While we're correcting things: the late-filing penalty.

If you miss Tax Day on 15 April and owe money, the IRS charges 5% of your unpaid tax for each month you're late. That bit's right. But the minimum penalty for filing more than 60 days late is $525 for returns due in 2026. Not $485, which is the figure the source article used. The $485 number applied two years ago. The IRS adjusts it for inflation annually and the current figure is on their website if you look; not many people do.

There's also a separate penalty for not paying — half a per cent a month on the outstanding balance, running until you clear it. And interest, compounding daily at 7% annually right now, which works out at roughly 7.25% effective because of the daily compounding. Or rather, it works out at whatever you'd prefer not to think about when you're already behind on your taxes.

One thing worth knowing: if you can't pay by 15 April but you can file — file. Or file an extension. The extension kills the filing penalty. It doesn't kill the payment penalty, but the filing penalty is the brutal one. Five per cent a month versus half a per cent. The maths is obvious.

So What Should You Actually Do

File electronically. Choose direct deposit. Use Schedule 8812 for the Child Tax Credit and Schedule EIC if you're claiming the Earned Income Tax Credit with children — most tax software handles both without you needing to think about it, but if someone's doing your return for you, make sure both are attached. I've seen preparers miss Schedule EIC more often than you'd expect.

Check whether you qualify for the EITC even if you don't have kids. Workers aged 25 to 64 earning below $19,104 — or $26,214 if married filing jointly — are eligible. The credit is small, but the IRS says it is one of the most underclaimed in the entire tax code. Billions of dollars go uncollected every year because people either do not file or do not realise the credit exists.

For a family already stretched — and a lot of families are stretched right now — the gap between filing correctly and not filing at all is not a rounding error. It is rent. It is three months of groceries. It is keeping the car on the road through spring.

The 2025 filing deadline is 15 April 2026. EITC and ACTC refunds won't arrive before early March at the earliest.

Originally published on IBTimes UK