Tax Law and News Millions of Americans will receive IRS tax refund interest payments Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Intuit Accountants Team Published Aug 20, 2020 2 min read This week, the U.S. Treasury Department and the IRS will send interest payments to about 13.9 million individual taxpayers who timely filed their 2019 federal income tax returns and are receiving refunds. 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. Most interest payments will be issued separately from tax refunds. In most cases, taxpayers who received their refund by direct deposit will have their interest payment direct deposited in the same account. About 12 million of these payments will be direct deposited. Everyone else will receive a check. A notation on the check − saying “INT Amount” − will identify it as a refund interest payment and indicate the interest amount. 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. In January 2021, the IRS will send Form 1099-INT, Interest Income, to anyone who receives interest totaling at least $10. This provision is different from the long-standing 45-day rule, generally requiring 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. 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 of July 15, 2020, in this instance. This refund interest requirement only applies to individual income tax filers; businesses are not eligible. Interest is paid at the legally prescribed rate that is adjusted quarterly. The rate for the second quarter, ending June 30, was 5%, compounded daily. Effective July 1, the rate for the third quarter dropped to 3%, compounded daily. Where the calculation period spans quarters, a blended rate applies, consisting of the number of days falling in each calendar quarter. No interest will be added to any refund issued before the original April 15 deadline. Previous Post Impact of COVID-19 on the foreign income and housing exclusions Next Post September 2020 tax and compliance deadlines Written by Intuit Accountants Team The Intuit® Accountants team provides ProConnect™ Tax, Lacerte® Tax, ProSeries® Tax, and add-on software and services to enable workflow for its customers. Visit us at https://proconnect.intuit.com, or follow us on Twitter @IntuitAccts. More from Intuit Accountants Team Comments are closed. Browse Related Articles Tax Law and News 2021 tax filing season begins Feb. 12, 2021 Tax Law and News IRS Continues to Warn Tax Pros and Taxpayers About New … Client Relationships What to Tell Your Clients About Tax Refund Delays Tax Law and News IRS Releases More Details About Latest Taxpayer Scam Tax Law and News IRS readies nearly 4 million refunds for unemployment c… Tax Law and News IRS begins correcting tax returns for unemployment comp… Tax Law and News Taxpayers may receive a refund for taxes paid on 2020 u… Tax Law and News IRS.gov, E-File and ID Theft Tax Fraud Highlight 2016 T… Tax Law and News Tax Law Changes for 2015 Tax Law and News IRS Urges Tax Pros to Step Up Security and Beware of Ph…