13.9 Million Americans to Receive IRS Tax Refund Interest; Taxable Payments to Average $18

Did you file your 1040 2019 tax return by July 15th and received a refund?

• At the time you received your refund, you may have noticed that your refund was larger than expected, that is because the IRS is paying interest income on refunds this year, because of the disaster-related postponement of the filing deadline.
• The IRS is now taking action to pay the interest it owes to taxpayers that have not received it already.

The week of August 18th, the Treasury Department will begin sending interest payments to about 13.9 million individual taxpayers who timely filed their returns and are receiving refunds.

• In most cases, taxpayers who received their refund by direct deposit will have their interest payments direct deposited in the same account. About 12 million of these payments will be direct deposited. The entry on the bank direct debit will reference “IRS TREAS”, “TAX REF SEC.”
• Everyone else will receive a check. A notation on the check – saying “INT Amount” – will identify it as a refund interest payment, along with the amount.
  

By law, these interest payments are taxable and taxpayers who receive them must report the interest income on 2020 income tax returns that are filed next year. The IRS will issue a 1099-INT for anyone who receives more than $10.

The interest rates paid are generous. The rate for the second quarter ending June 30 was 5%, compounded daily, and then effective July 1, the rate dropped to 3%, compounded daily.

Where a disaster-related postponement exists, the IRS is required, by law, to pay interest, calculated from the original April 15 filing deadline, as long as an individual files a 2019 federal income tax return by the postponed deadline − July 15, 2020, in this instance. This refund interest requirement only applies to individual income tax filers − businesses are not eligible.

Still waiting for your refund. The IRS Where’s My Refund? tool is the best way to check on your refund status. You’ll need your Social Security number or ITIN, your filing status (single, married, head of household) and your exact refund amount. Do not file a second tax return, and don’t just keep clicking on Where’s My Refund? It’s only updated once every 24 hours.