The IRS will send interest payments to about 13.9 million taxpayers this week. The average payment will be about $18. You can expect a payment if you filed a 2019 return before this year's July 15 deadline and either received a refund in the past three months or will receive a refund. Most interest payments will be sent separately from tax refund payments.
Normally, the IRS only adds interest to refunds issued more than 45 days after the return due date. The typical tax return due date is April 15. However, because of the coronavirus pandemic, this year's filing deadline was pushed back to July 15. The change is considered a disaster-related postponement, which means the IRS is required by law to pay interest calculated from the original April 15 filing deadline for anyone who files their return by the postponed deadline. This refund interest requirement only applies to individual income tax filers – businesses are not eligible.
How Will the Payment Be Made?
For about 12 million people, the interest payment will be directly deposited into the same bank account that their tax refund was deposited. Everyone else will receive a paper check. A notation on the check saying "INT Amount" will identify it as a refund interest payment and indicate the interest amount.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
How the Interest Amount is Calculated
Interest is paid at rates set by law. The rate for the second quarter ending June 30 was 5%. The rate for the third quarter starting July 1 dropped to 3%. Interest is compounded daily.
Where the calculation period spans more than one quarter, a blended rate consisting of the number of days falling in each calendar quarter applies. No interest will be added to any refund issued before the original April 15 deadline.
Taxability of Interest Payments
If you receive one of the IRS interest payments, you must report the interest as taxable income on your 2020 federal income tax return that you'll file next year. In January 2021, the IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Premium Tax Credit: Are You Eligible For This Health Insurance Tax Break?Tax Credits The tax credit can help qualifying individuals pay for coverage from the Affordable Care Act’s health insurance marketplace.
-
FSA Contribution Limits Are Higher for 2025FSA A flexible spending account allows you to build tax-free savings for certain medical expenses.
-
Florida Tax Deadline Extension: What You Need to KnowTax Relief The IRS extended federal tax return file time due to severe storms.
-
IRS: Here’s How to Recover Your Tax Records After a Natural DisasterTax Records Your tax documents can help you get federal relief faster, the IRS says.
-
Voters Approve New Veteran Property Tax ReliefTax Relief Thanks to the election, some Veterans will soon see expanded property tax exemptions.
-
Nevada Approves Diaper Tax Relief Amid Childcare CrisisTax Relief Nevada voters have expanded sales tax relief to diapers. But are prices still too high?
-
Earned Income Tax Credit (EITC) 2024: How Much Will You Get?Tax Credits The refundable amount for workers with or without children is slightly higher this year. Here’s what you need to know.
-
Two Consequential Tax Cases You May Not Have Heard AboutThe Supreme Court's decisions in these cases create uncertainty about challenging IRS regulations and guidance. Expect more litigation to follow.
