Those who qualify for a tax return and received it after April 15 will get a little extra money due to the delayed tax day.
These interest payments are taxable and will be counted in 2020 tax filings.
The amount will likely be small and will vary depending on the amount of your refund and when you filed your taxes.
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You might receive a second, far smaller check or direct deposit payment from the IRS this year.
No, it’s not another stimulus check — it’s interest owed to you by the US government.
Due to the coronavirus pandemic, Tax Day was pushed from April 15 to July 15. In a quirk in the tax code first written about in The Wall Street Journal, this new deadline means tax payers who filed on or before July 15 — and qualified for a refund — will earn interest on their refunds if they received it after April 15.
Basically, the IRS is paying a fee for holding on to the money for a longer period of time. And yes, this means there is a small benefit for filing taxes closer to July 15.
Normally, there is a 45-day grace period to issue tax refunds, but the deadline extension means that is no longer the case. The IRS has been working at a reduced cap city while also issuing stimulus checks.
During routine tax seasons, the IRS issues 90% of tax returns in 21 days, meaning interest isn’t issued on returns. But, according to a report done by CBS News in June, the IRS has 4.7 million backlogged returns.
How much you’ll get
For every $1,000 in a refund, the taxpayer earns 14 cents a day of interest for earlier dates and 8 cents a day for later dates. Breaking that down further, tax refunds dated from April 15 to June 30 wil receive 5% annual interest for every $1,000 refunded, while refunds dated from July 1 to September 30 will have 3% annual interest.
The IRS has not announced exactly how this extra money will be given out to taxpayers.
It’s also important to note that this interest is taxable.
“This means you will receive a 1099-INT for 2019 and will pay taxes on it when you file your 2020 return,” Pamela Lucina, Northern Trust Wealth Management’s chief fiduciary officer, told CNET.
Have more questions about your taxes? Click here to read Business Insider’s complete guide.
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Source:: Business Insider – Politics