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.
-
Could This Little Known Data Shift Hurt Your 2026 Social Security COLA?The BLS has changed how it measures the inflationary data that determines whether Social Security benefits will get a Cost-of-Living Adjustment (COLA). Will it hurt your benefits?
-
Financial Pros Provide a Beginner's Guide to Building Wealth in 10 YearsBuilding wealth over 10 years requires understanding your current financial situation, budgeting effectively, eliminating high-interest debt and increasing both your income and financial literacy.
-
‘I Play Pickleball in Retirement.’ Is It HSA-Eligible?Retirement Tax Staying active after you retire may be easier with these HSA expenses. But there’s a big catch.
-
Ask the Editor, July 17: Tax Questions on the New Tax LawAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the new tax law.
-
Mississippi Tax-Free Weekend 2025 Is Here: What to Know Before You ShopTax Holiday Just in time for Prime Day, Mississippi is celebrating a tax holiday in July. Find out how you can save on back-to-school essentials.
-
Ask the Editor, July 4: Tax Questions on Inherited IRAsAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the rules on inheriting IRAs.
-
Ten Cheapest Places to Live in VirginiaProperty Taxes The Commonwealth of Virginia has some cheap places to live. Here are a few if you hate paying property taxes.
-
IRS Watchdog: Three Problems the IRS Must Address in 2025IRS The tax season is over, but new changes to the IRS can pose risks to your taxpayer experience.
-
Ask the Editor, June 27: Tax Questions on Disaster Losses, IRAsAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on paper checks, hurricane losses, IRAs and timeshares.
-
2025 SALT Cap Could Hurt Top 'Hidden Home Cost'Tax Deductions The GOP tax bill could make hidden homeowner costs worse for you. Here’s how.
