Delayed Tax Refund

The IRS is Paying Interest on Your Delayed Tax Refund in 2020

Here is some good news for upwards of about 13.9 million taxpayers: The Treasury Department and IRS are sending refund interest payments out to those who filed their 2019 federal income tax returns on time. Are you one of them?

What is refund interest?

The IRS is generally required to add interest to any refunds issued more than 45 days after the tax return due date (typically April 15 each year); however, this year is a little different due to COVID-19.

Even though the tax return due date was technically July 15, the IRS is still required to pay interest on refunds issued 45 days after April 15 since the deadline postponement was disaster related. That means anyone who filed by July 15 and received their tax refund after May 30 will receive interest on that refund—so even if you didn’t file until July, your refund will have interest that grew from June 1 to the day you receive it.

Note that this refund interest doesn’t apply to businesses—only individual taxpayers.

Who gets refund interest payments?

Payments will be made to individual taxpayers who filed a 2019 return by this year’s July 15 deadline and either received a refund in the past three months (after May 30) or are still waiting on a refund.

How much is my refund interest worth?

The interest payments average about $18.

How will I get my refund interest payment?

In most cases, taxpayers who received their refund by direct deposit will have their interest payment direct deposited in the same account.

Everyone else will receive a check. A notation on the check saying “INT Amount” will identify it as a refund interest payment and indicate the interest amount.

Do I owe taxes on refund interest?

Yes, you will owe interest taxes on your delayed refund interest payment. You’ll need to report your payment amount as interest income when you file your taxes in 2021. The IRS will send a Form 1099-INT in January detailing the interest payment info to anyone who receives interest totaling at least $10.

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