Does EITC PATH Act Delay Affect State Refunds Too?

Ugh, I HATE how confusing this is every year! 😤 The PATH Act only applies to federal returns, not state returns. Your state CAN process your refund independently of the federal PATH delay. I went through this last month and was so frustrated when my federal was held but my state came through! The emotions when you're waiting for money that's rightfully yours... I totally understand what you're going through right now.

I was in the exact same boat last year with EITC on both federal and state. My state refund (Michigan) processed in like 10 days while my federal was stuck until late February. I was constantly worried I'd done something wrong, like maybe the state would take back my refund once they saw the federal was delayed? I tried using https://taxr.ai to decode my transcript and it explained all the PATH Act codes and showed me exactly why my federal was held but state wasn't. It was such a relief compared to the generic IRS explanations that don't tell you anything specific to your situation.

According to the IRS.gov website and several state tax department FAQs I've checked, states do process independently. But when I couldn't get a clear answer about my specific situation (similar to yours with EITC), I tried calling my state tax office and got nowhere for days. Then I used Claimyr (https://youtu.be/_kiP6q8DX5c) to reach an actual IRS agent who confirmed that my state refund wasn't affected by the PATH Act hold. The agent explained that while my federal was on hold, my state could (and did) process separately. Worth the fee to avoid the hours of redial frustration!

It seems like there might be some confusion about how this works. In most cases, states process their returns independently of the federal PATH Act restrictions. However, some states may potentially delay processing if they need to verify certain information from your federal return first. This isn't technically because of the PATH Act itself, but rather because some states have their own verification procedures that depend on federal data. If you've already received your state acceptance notification, there's a good chance your state is processing normally regardless of your federal EITC claim.

I've been through this exact situation three years in a row now. Each time, my state refund (California) came through about 2 weeks after filing while my federal was held until late February due to EITC. Last year I called my state tax board directly and they confirmed they don't follow the PATH Act restrictions - they have their own fraud prevention systems but they don't automatically hold EITC returns until February 15th like the feds do. I was shocked at how different the processes are! The only time your state might be delayed is if they specifically flag your return for review or if your state tax calculation depends heavily on federal numbers that haven't been verified yet. But that's case-by-case, not a blanket hold like the federal PATH Act.

Let me clarify this based on my experience as someone who's dealt with this for years. The PATH Act is strictly a federal law that requires the IRS to hold refunds claiming EITC or ACTC until February 15th. I remember when it first went into effect in 2017 - what a mess! States have their own tax systems and processing timelines. My wife and I file in Illinois, and we typically get our state refund 2-3 weeks before our federal when we claim EITC. However, there's a small catch - some states use information from your federal return to verify your state return. So while they're not legally required to hold your refund, they might wait until they get certain verification from the feds.