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THE IRS IS MAKING SMALL TAX REFUND INTEREST PAYMENTS TO SOME PEOPLE
BY HUTCHINSON AND BLOODGOOD | August 24, 2020 | TAX TIPS
 
 
 
 


In the near future, you may notice a small payment in your bank account or you may receive a check from the IRS. The tax agency recently announced that it will send interest payments to about 13.9 million individual taxpayers who filed their 2019 federal income tax returns on time and are receiving refunds.

The interest payments will average about $18. They will be made to individual taxpayers who filed their 2019 returns by this year's extended July 15 deadline and either received a refund in the past three months or will receive a refund. Most interest payments will be issued separately from tax refunds.

In most cases, taxpayers who received their refunds by direct deposit will have their interest payments direct deposited in the same bank accounts. About 12 million of these payments will be direct deposited.

Everyone else will receive a paper check. A notation on the check which says — "INT Amount" — will identify it as a refund interest payment and indicate the interest amount.

By law, these interest payments are taxable and if you receive one, you must report the interest on your 2020 federal income tax return that you file next year. In January 2021, the IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10.

This provision to pay interest is different from a long-standing 45-day rule, which generally requires the IRS to add interest to refunds on timely-filed refund claims issued more than 45 days after the return due date.

Instead, this year's COVID-19-related July 15 due date is considered a disaster-related postponement of the filing deadline. When a disaster-related postponement exists, the IRS is required by law to pay interest, calculated from the original April 15 filing deadline. This is true as long as an individual files a 2019 federal income tax return by the postponed deadline, which was July 15, 2020, in this case. This refund interest requirement only applies to individual income tax filers. Businesses aren't eligible.

Interest is paid at the legally prescribed rate that is adjusted quarterly.
 
 
 
 
 

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With the uncertainty of the situation surrounding coronavirus (COVID-19) continuing to evolve, we understand that it is affecting businesses and individuals in many different ways. 

At Hutchinson and Bloodgood, we value the relationships we have built with you. We will continue to be accessible so that we can serve and assist you while providing the level of attention that you deserve.

We will work alongside you throughout this ongoing situation to develop and build the optimal solutions for you.

Please contact us with your questions and concerns.

 
Disclaimer: This material has been prepared for informational purposes only. It is not intended as a substitute for speaking to your accountant, tax planner or financial planner. All information is provided “as is.” With change happening on a daily basis, we do not guarantee completeness, accuracy, timeliness or results obtained from the use of this information.
 
 
 
 
 
 
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