The Government Will Pay You 5 Percent Interest to File Your Taxes
The IRS is paying up to 5 percent interest on late tax refunds, according to CNBC.
The Internal Revenue Service stated that it would credit interest on tax refunds paid after April 15. However, to collect you had to file by midnight on July 15. The IRS is paying taxpayers interest due to the postponement of returns amid the coronavirus crisis.
“This year’s July 15 filing date is considered a disaster-related postponement of the filing deadline,” said IRS spokesman Eric Smith. “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 income taxpayer files a 2019 tax return by the postponed deadline —July 15, 2020 in this instance.”
The IRS typically pays interest from April 15 until the refund is issued. This year, the agency is paying 5 percent, compounded daily. This return is far greater than bonds or high-yield savings are currently returning. Interest payments might be distributed separate from refunds. The interest you earn will be subject to taxation for the 2020 tax year.
“This isn’t free money,” said Dan Herron, CPA and principal at Elemental Wealth Advisors in San Luis Obispo, California. “You’re going to get a Form 1099-INT from the IRS in 2020.”