Typically the IRS has a 45-day grace period after the April 15 tax deadline to issue tax refunds, but the rule doesn't apply because of the tax-deadline extension. In other words, if you are set to get money back from your taxes, and you filed ahead of the annual deadline, interest will start accruing on that money if the government is late paying you. About 12 million of these payments will be direct deposited. After the 45 days have passed, interest begins to accrue. googletag.enableServices(); We occasionally highlight financial products and services that can help you make smarter decisions with your money. By law, the IRS does not owe interest on refunds if they are issued within 45 days of the due date of the return (usually April 15) or the date the return is filed, whichever is later. By law, the IRS is required pay interest on tax refunds if it is more than 45 days late in issuing a refund for an on-time tax return. It may be sent as a separate payment. Effective July 1, the rate for the third quarter dropped to 3%, compounded daily. Interest payments may be received separately from the refund. Instead, this year's COVID-19-related July 15 due date is considered a disaster-related postponement of the filing deadline. But others, who filed electronically, are still waiting for their refunds, too. When refunds are delayed, the IRS pays interest rates far higher than bank accounts do: 5% compounded daily for the second quarter and 3% compounded daily starting July 1. The government agency announced it would grant interest on tax refunds that are issued after April 15 – … To check your refund status, you'll need three things: Editor's note: This article has been updated to clarify that 5% and 3% are the annual rates. The tax filing and payment deadline is July 15. To calculate how much interest you could be due, let's use the average refund amount so far for 2020, which the IRS says is $2,767. It applies to folks … During this time the agency was also tasked with delivering about over 160 million stimulus checks to Americans. The IRS announced it’s starting to send out interest payments this week to individual taxpayers whose tax refunds were delayed. The rate for the second quarter ending June 30 was 5%, compounded daily. As Rubin put it, the IRS is "paying for the privilege of holding on to the money since April 15," just as a taxpayer would pay the IRS if they owed money. However, the date for computing interest begins 45 days after the later of: The unextended due date. The average interest payment will be … When the Treasury Department moved the usual April tax deadline to July 15, it exposed a "quirk in the tax code," the Wall Street Journal's Richard Rubin first reported on Wednesday. The IRS sets a deadline of 45 days from the filing deadline to pay out any refunds. You’ll need to report your payment amount as interest income when you file your taxes in 2021. 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