But others, who filed electronically, are still waiting for their refunds, too. googletag.enableServices(); In other words, if you are set to get money back from your taxes, and you filed ahead of the annual deadline, interest will start accruing on that money if the government is late paying you. The average interest payment will be … as well as other partner offers and accept our, Fee-only vs. commission financial advisor, See Business Insider's picks for the best tax software ». We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective. If you're still waiting for your federal tax refund, the Internal Revenue Service has a bit of good news for you. Interest on individual 2019 refunds reflected on returns filed by July 15, 2020 will generally be paid from April 15, 2020 until the date of the refund. To calculate how much interest you could be due, let's use the average refund amount so far for 2020, which the IRS says is $2,767. The penalty for filing late is steeper. Savers will notice this is far more interest than is currently being offered by even the best high-yield savings accounts and certificates of deposit (CD). The government agency announced it would grant interest on tax refunds that are issued after April 15 – … Page Last Reviewed or Updated: 25-Sep-2020, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Treasury Inspector General for Tax Administration, 13.9 million Americans to receive IRS tax refund interest; taxable payments to average $18. The IRS has been severly affected by coronavirus shutdowns and performed only "mission-critical functions" for at least two months. This does not influence whether we feature a financial product or service. The IRS announced it’s starting to send out interest payments this week to individual taxpayers whose tax refunds were delayed. The IRS says 13.9 million taxpayers will get a check averaging $18 on the interest on their refunds. All your questions answered about filing and paying taxes. "Interest on individual 2019 refunds reflected on returns filed by July 15, 2020 will generally be paid from April 15, 2020 until the date of the refund. Where the calculation period spans quarters, a blended rate applies, consisting of the number of days falling in each calendar quarter. But the IRS last month said it would pay interest on individual 2019 refunds reflected on returns filed by July 15. It applies to folks … It may be sent as a separate payment. Some of the offers on this site are from companies who are advertising clients of Personal Finance Insider (for a full list. Interest payments may be received separately from the refund. Instead, this year's COVID-19-related July 15 due date is considered a disaster-related postponement of the filing deadline. I got my 2007 refund, but they did not pay interest. The IRS charges interest when taxpayers don’t pay on time and it pays interest to taxpayers when the government issues refunds too slowly. Interest is paid at the legally prescribed rate that is adjusted quarterly. Consider a taxpayer expecting the average refund — $2,767 — who filed a return on May 1 and is issued their refund on June 30. Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. What is the penalty for filing taxes late? In addition to the refund amount, the IRS will owe that taxpayer about $30 — a fraction of the annual 5% rate for 76 days, compounded daily. After the 45 days have passed, interest begins to accrue. Account active For the third quarter, which ends on September 30, 2020, the interest rate will be 3% per year, compounded daily. During this time the agency was also tasked with delivering about over 160 million stimulus checks to Americans. We occasionally highlight financial products and services that can help you make smarter decisions with your money. In January, the IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10. The interest payments, averaging about $18, 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 or will receive a refund. Your Social Security number or individual taxpayer identification number. Interest payments may be received separately from the refund. When the Treasury Department moved the usual April tax deadline to July 15, it exposed a "quirk in the tax code," the Wall Street Journal's Richard Rubin first reported on Wednesday. To answer your question, yes, the IRS owes interest to taxpayers on delayed refunds. The IRS updates its system daily, usually overnight. Because the coronavirus pandemic severely limited the ability of the IRS to process tax filings, many refunds … In most cases, taxpayers who received their refund by direct deposit will have their interest payment direct deposited in the same account. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. No interest will be added to any refund issued before the original April 15 deadline. The IRS, by law, must pay interest on delayed refund checks. In the past, the IRS paid me interest on refunds even if I filed a year late. The tax filing and payment deadline is July 15. 2  These rates are higher than what most would receive in a short-term CD or high-yield savings account. }); Disclosure: This post is brought to you by the Personal Finance Insider team. The daily rate is the annual rate divided by 365. window.googletag = window.googletag || {cmd: []}; The IRS will send a Form 1099-INT in January detailing the interest payment info to anyone who receives interest … By law, these interest payments are taxable and taxpayers who receive them must report the interest on the 2020 federal income tax return they file next year. To check your refund status, you'll need three things: Editor's note: This article has been updated to clarify that 5% and 3% are the annual rates. Typically, tax returns are due on April 15, meaning that the IRS has until May 30 to get your refund to you. Effective July 1, the rate for the third quarter dropped to 3%, compounded daily. Typically the IRS has a 45-day grace period to issue refunds to taxpayers who file by April 15 before interest starts accruing on the amount they're owed. We do not give investment advice or encourage you to adopt a certain investment strategy. 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