Many individual taxpayers whose 2019 tax returns show refunds will receive interest from the IRS. The regular April 15 due date for filing returns and paying income taxes was postponed to July 15, 2020, as part of the IRS response to the COVID-19 pandemic. The IRS is required by law to pay interest on tax refunds due to individual taxpayers affected by the federally declared disaster who filed their Federal tax returns for 2019 on or before the postponed due date of July 15, 2020. The overpayment interest will generally accrue from the original April 15 due date, rather than the postponed due date of July 15.
Normally, the IRS is required to pay interest on a refund if the refund is issued after a statutory 45-day period. This rule does not apply to individual taxpayers who qualify for relief due to a federally declared disaster.
Interest Payments are separate from Economic Impact Payments
If you have questions about the Economic Impact Payments, including eligibility, payment amounts and what to expect, visit our Economic Impact Payments Information Center.
Nearly 14 million individual taxpayers who filed their 2019 federal income tax returns on time and received refunds will receive interest on the refunds. Business entities are not eligible to receive overpayment interest.
No interest will be paid for any refund issued before the original April 15 due date.
The average amount of the interest payments is $18.
Individual taxpayers who filed a 2019 return by the July 15, 2020 postponed filing deadline and have already received a refund will receive an interest payment separately.
Receiving a payment
Most taxpayers who received their tax refunds by direct deposit will have their interest payments direct deposited in the same accounts. Everyone else will receive a paper check. A notation on the check (INT Amount) will identify it as an interest payment on a tax refund. Most interest payments will be issued separately from tax refunds.
Interest is taxable income
The 2019 refund interest payments are taxable, and taxpayers must report the interest on their 2020 federal income tax return. The IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10.
Interest is paid at the legally prescribed rate that is adjusted quarterly. The rate for noncorporate taxpayers for the second quarter, which ended June 30, 2020, was 5%, compounded daily. Effective July 1, 2020 the rate for the third quarter dropped to 3%, compounded daily.