You May Receive a Tax Interest Payment This Week

The IRS and Treasury Department will send interest payments this week to taxpayers who filed a 2019 tax return by the July 15 deadline and either received a refund in the past three months or has been scheduled to receive a refund.

employer tax creditTaxpayers will receive the interest payments, averaging about $18, by direct deposit into the same account as their direct deposit refund or receive a check in the mail. The check will have a notation saying “INT Amount” to identify it as a refund interest payment and indicate the interest amount.

Recipients will need to report the interest on their 2020 tax return, as these payments are taxable. The IRS will send Form 1099-INT in January to taxpayers that receive interest totaling $10 or more.

Why is there an interest payment?

The tax deadline was extended to July 15 due to the Coronavirus pandemic. It is considered a disaster-related postponement, which requires the IRS 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.

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.

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