Still Refundless? The IRS Might Be Adding Interest to Your Tax Refund
The Internal Revenue Service (IRS) stated this week that up to 14 million Americans will receive an interest payment if they filed their taxes after the original April 15 deadline. These interest payments will be sent to about 13.9 million Americans who filed their 2019 federal income tax returns on time by the extended deadline - July 15th and either received a refund in the past 3 months or are still waiting for one. However, no interest will be added to any refund issued before the original April 15th deadline.
Around 12 million Americas who received their tax refunds by direct deposit will receive their interest payment paid the same way to their account. The others will receive a paper check with the notation “INT Amount”, identifying it as the interest payment. The size of the interest payment depends on the size of the tax refunds. According to the IRS, the average interest payment is about $18. Although the figure looks small, the rate is quite generous.
The IRS is paying interest on tax refunds because the tax filing deadline was postponed to July 15th due to the coronavirus pandemic. They stated that when a disaster-related postponement exists, the IRS is required by law, to pay interest calculated from the original April 15th deadline, on the condition that an individual files a 2019 federal income tax return by the postponed deadline.
This only applies to individual income tax filers. The IRS said that they will send a Form 1099-INT to anyone who receives interest that totals at least $10 in January 2021. By law, the interest payments are taxable and it must be reported by those who get them on the 2020 federal income tax return they file next year no matter how small the payment amounts.
More than 102 million tax refunds which are worth more than $282 billion had been issued by the IRS as of July 24th. The figures showed a 3% decrease from the same point in 2019. On its website, the IRS acknowledged that the agency is taking longer to process mailed documents because of COVID-19 related delays.
If you’re still waiting for your tax refunds, you can check its status using the “Where’s My Refund?” tool on the IRS website, where you will need to use your Social Security Number or ITIN, your filing status and the exact refund amount.
Need help with your tax refund? Get in touch with the experts at Landmark Tax to let’s talk about what we can do for you.