IRS included interest on refund
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
IRS included interest on refund
So I filed my taxes at the beginning of May, and the IRS issued my refund fairly promptly. For some reason, they added $1+change to the refund amount of roughly $800. I'm wondering if this was interest, and if so, why. Like I said, they issued the refund promptly (less than 2 weeks) and it's on me that I didn't file until this late. Could it have to do with the later COVID-induced filing deadline and the fact I filed after April 15th ? The only other oddity is that my requested refund was precisely equal to my withholding, because of non-refundable tax credits which exceeded my tax liability.
There's this: https://www.marketwatch.com/story/pande ... 1614806790
... but my refund was issued less than 45 days after April 15th, never mind the later deadline this year.
There's this: https://www.marketwatch.com/story/pande ... 1614806790
... but my refund was issued less than 45 days after April 15th, never mind the later deadline this year.
Re: IRS included interest on refund
FWIW, we had the same experience.
Filed taxes early May, both adult children (one dependent, one non-dependent) received refunds within 7 days with $1.01 and $5.38 above requested. It appears to be 3% interest back to April 15th.
Mine is not yet processed. Paying 3%, at this point I hope they take their time.
Filed taxes early May, both adult children (one dependent, one non-dependent) received refunds within 7 days with $1.01 and $5.38 above requested. It appears to be 3% interest back to April 15th.
Mine is not yet processed. Paying 3%, at this point I hope they take their time.
"Better is the enemy of good." Good is good.
Re: IRS included interest on refund
When they extend the deadline, which except for the past two years is very rare, they pay interest from the original deadline, since that's the lawRustyShackleford wrote: ↑Fri May 14, 2021 8:54 pm So I filed my taxes at the beginning of May, and the IRS issued my refund fairly promptly. For some reason, they added $1+change to the refund amount of roughly $800. I'm wondering if this was interest, and if so, why. Like I said, they issued the refund promptly (less than 2 weeks) and it's on me that I didn't file until this late. Could it have to do with the later COVID-induced filing deadline and the fact I filed after April 15th ? The only other oddity is that my requested refund was precisely equal to my withholding, because of non-refundable tax credits which exceeded my tax liability.
There's this: https://www.marketwatch.com/story/pande ... 1614806790
... but my refund was issued less than 45 days after April 15th, never mind the later deadline this year.
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
Re: IRS included interest on refund
But like I said, my refund was issued less than 45 days (less than 30 days, in fact) from April 15.nalor511 wrote: ↑Fri May 21, 2021 2:00 amWhen they extend the deadline, which except for the past two years is very rare, they pay interest from the original deadline, since that's the lawRustyShackleford wrote: ↑Fri May 14, 2021 8:54 pm So I filed my taxes at the beginning of May, and the IRS issued my refund fairly promptly. For some reason, they added $1+change to the refund amount of roughly $800. I'm wondering if this was interest, and if so, why. Like I said, they issued the refund promptly (less than 2 weeks) and it's on me that I didn't file until this late. Could it have to do with the later COVID-induced filing deadline and the fact I filed after April 15th ? The only other oddity is that my requested refund was precisely equal to my withholding, because of non-refundable tax credits which exceeded my tax liability.
There's this: https://www.marketwatch.com/story/pande ... 1614806790
... but my refund was issued less than 45 days after April 15th, never mind the later deadline this year.
-
- Posts: 2365
- Joined: Tue May 27, 2014 3:50 pm
Re: IRS included interest on refund
They had your money for 16 months, or at least some of your money. They paid you interest on the last month. The other 15 were free to them.
Re: IRS included interest on refund
So was mine. Shrug.RustyShackleford wrote: ↑Wed Jun 02, 2021 7:04 pmBut like I said, my refund was issued less than 45 days (less than 30 days, in fact) from April 15.nalor511 wrote: ↑Fri May 21, 2021 2:00 amWhen they extend the deadline, which except for the past two years is very rare, they pay interest from the original deadline, since that's the lawRustyShackleford wrote: ↑Fri May 14, 2021 8:54 pm So I filed my taxes at the beginning of May, and the IRS issued my refund fairly promptly. For some reason, they added $1+change to the refund amount of roughly $800. I'm wondering if this was interest, and if so, why. Like I said, they issued the refund promptly (less than 2 weeks) and it's on me that I didn't file until this late. Could it have to do with the later COVID-induced filing deadline and the fact I filed after April 15th ? The only other oddity is that my requested refund was precisely equal to my withholding, because of non-refundable tax credits which exceeded my tax liability.
There's this: https://www.marketwatch.com/story/pande ... 1614806790
... but my refund was issued less than 45 days after April 15th, never mind the later deadline this year.
Re: IRS included interest on refund
It's a trap!
The IRS is going to check that you noted the interest next year when you file your 2021 tax return.
The IRS is going to check that you noted the interest next year when you file your 2021 tax return.
Re: IRS included interest on refund
Are you sure the $1+ difference is interest? I'm guessing it's just tax, due to a rounding of the amount of tax withheld and/or the amount of tax calculated.RustyShackleford wrote: ↑Fri May 14, 2021 8:54 pm So I filed my taxes at the beginning of May, and the IRS issued my refund fairly promptly. For some reason, they added $1+change to the refund amount of roughly $800. I'm wondering if this was interest, and if so, why. Like I said, they issued the refund promptly (less than 2 weeks) and it's on me that I didn't file until this late. Could it have to do with the later COVID-induced filing deadline and the fact I filed after April 15th ? The only other oddity is that my requested refund was precisely equal to my withholding, because of non-refundable tax credits which exceeded my tax liability.
There's this: https://www.marketwatch.com/story/pande ... 1614806790
... but my refund was issued less than 45 days after April 15th, never mind the later deadline this year.
Edit: It is very likely interest, per my subsequent post.
Last edited by MarkNYC on Thu Jun 03, 2021 2:57 pm, edited 3 times in total.
Re: IRS included interest on refund
I received my refund on 5/19. I received almost $3 more than I claimed for my refund.
-
- Posts: 1604
- Joined: Wed Sep 10, 2014 4:11 pm
Re: IRS included interest on refund
@livesoft is correct. It is reportable as interest on Schedule B, so for those who are receiving a little extra it would be proper to note the amount and report it a year from now.
I've no idea why the IRS is paying interest from 4/15. I think the law gives them 45 days from filing. Maybe it's a deliberate decision to make things easier on overworked IRS employees. Who knows.
Re: IRS included interest on refund
So here is the IRS explanation. The May 17, 2021 filing deadline is considered a disaster-related postponement of the deadline. When a disaster-related postponement exists, the law requires that interest paid on refunds be calculated from April 15th, as long as the taxpayer files by the postponed deadline. This provision in the law applies only to individuals, not to businesses, and is separate from the long-standing 45 day rule for paying interest on refunds.RustyShackleford wrote: ↑Fri May 14, 2021 8:54 pm So I filed my taxes at the beginning of May, and the IRS issued my refund fairly promptly. For some reason, they added $1+change to the refund amount of roughly $800. I'm wondering if this was interest, and if so, why. Like I said, they issued the refund promptly (less than 2 weeks) and it's on me that I didn't file until this late. Could it have to do with the later COVID-induced filing deadline and the fact I filed after April 15th ? The only other oddity is that my requested refund was precisely equal to my withholding, because of non-refundable tax credits which exceeded my tax liability.
There's this: https://www.marketwatch.com/story/pande ... 1614806790
... but my refund was issued less than 45 days after April 15th, never mind the later deadline this year.
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
Re: IRS included interest on refund
Do we know what interest rate they are using ? Then those of us could calculate the amount of extra refund we got, and see if interest is indeed the explanation.So here is the IRS explanation. The May 17, 2021 filing deadline is considered a disaster-related postponement of the deadline. When a disaster-related postponement exists, the law requires that interest paid on refunds be calculated from April 15th, as long as the taxpayer files by the postponed deadline. This provision in the law applies only to individuals, not to businesses, and is separate from the long-standing 45 day rule for paying interest on refunds.
Re: IRS included interest on refund
Should be 3%, so in your case with roughly $800 refund, 3% would be $24 annually, or $2/month. You said you received the refund in less than 30 days, so $1+change interest would make sense.RustyShackleford wrote: ↑Thu Jun 03, 2021 7:48 pmDo we know what interest rate they are using ? Then those of us could calculate the amount of extra refund we got, and see if interest is indeed the explanation.So here is the IRS explanation. The May 17, 2021 filing deadline is considered a disaster-related postponement of the deadline. When a disaster-related postponement exists, the law requires that interest paid on refunds be calculated from April 15th, as long as the taxpayer files by the postponed deadline. This provision in the law applies only to individuals, not to businesses, and is separate from the long-standing 45 day rule for paying interest on refunds.
Re: IRS included interest on refund
If you have an IRS account, then you should be able to download your "Record of Account" for 2020. Mine has a transaction line for "Interest credited to your account", which explains why my refund was a tiny bit larger than I expected.
-
- Posts: 200
- Joined: Sun Jul 14, 2019 11:02 am
- Location: Virginia
Re: IRS included interest on refund
I got my refund today with 3% interest from April 15 appears to explain the amount I received.
Re: IRS included interest on refund
That's very interesting.....and sneaky.
I knew I was due for a refund and knew the deadline was extended, but went ahead and filed my taxes as though the deadline was still April 15.
Received what I expected.....no interest added.
Glad I did as I probably wouldn't have noticed interest added.
Now I wonder about those IRS Covid-relief payments.
Is the IRS going to claw back those payments in the future as some kind of income?
I hope not, but never forget that whatever the government giveth, they can taketh away too.
- Info_Hound
- Posts: 421
- Joined: Wed Mar 23, 2011 9:47 am
- Location: Threw a dart in a map and moved
Re: IRS included interest on refund
My question is will they issue a 1099 for the interest paid? Any interest earned on my banking accounts under $10 is not required to be declared.
(I too received a $3.04 interest payment and the IRS letter noted I had to declare it as interest earned on my 2021 tax return)
Re: IRS included interest on refund
Either way you should declare it. I'll be including my $5.95 on next year's taxes.Info_Hound wrote: ↑Fri Jun 04, 2021 9:29 amMy question is will they issue a 1099 for the interest paid? Any interest earned on my banking accounts under $10 is not required to be declared.
(I too received a $3.04 interest payment and the IRS letter noted I had to declare it as interest earned on my 2021 tax return)
Re: IRS included interest on refund
Info_Hound wrote: ↑Fri Jun 04, 2021 9:29 amMy question is will they issue a 1099 for the interest paid? Any interest earned on my banking accounts under $10 is not required to be declared.
(I too received a $3.04 interest payment and the IRS letter noted I had to declare it as interest earned on my 2021 tax return)
I think the problem is that for direct deposit, there is no letter from the IRS explaining why the refund is higher. The first time this happened to me, I spent several hours reviewing my return looking for an error then finally decided the IRS must have errored. Turns out we were a "Fed disaster area" and I waited to file to the last minute, so I now realize it was probably interest.
In my case this year, I did finally receive my refund with about $48 in interest, so I should get a 1099 next year to remind me to include the interest on our returns.
"Better is the enemy of good." Good is good.
-
- Posts: 2365
- Joined: Tue May 27, 2014 3:50 pm
Re: IRS included interest on refund
Taxpayers must declare all interest.Info_Hound wrote: ↑Fri Jun 04, 2021 9:29 amMy question is will they issue a 1099 for the interest paid? Any interest earned on my banking accounts under $10 is not required to be declared.
The $10 rule applies to the one paying the interest -- such as a bank -- not the one receiving the interest.
Per the IRS instructions for 1099-Int, the bank, credit union, brokerage, etc. must file a 1099-Int any time it pays $10 or more in box 1 (interest), box 3 (interest on treasuries, savings bonds, etc.) and box 8 (tax-exempt interest).
- Info_Hound
- Posts: 421
- Joined: Wed Mar 23, 2011 9:47 am
- Location: Threw a dart in a map and moved
Re: IRS included interest on refund
I did indeed receive a letter from the IRS as originally stated. That is why I know it was interest the IRS was paying to me that changed my return.I think the problem is that for direct deposit, there is no letter from the IRS explaining why the refund is higher.
Hence my question, I know banks, brokerages, etc must file a 1099-int as I have received them in the past for anything over $10. However will the IRS issue a 1099-int to me (for 2021 taxes) for interest earned of the grand sum of less than $10? Have not run into a situation where the IRS actually gave me money versus the opposite.trueblueky wrote: ↑Fri Jun 04, 2021 3:55 pmTaxpayers must declare all interest.Info_Hound wrote: ↑Fri Jun 04, 2021 9:29 amMy question is will they issue a 1099 for the interest paid? Any interest earned on my banking accounts under $10 is not required to be declared.
The $10 rule applies to the one paying the interest -- such as a bank -- not the one receiving the interest.
Per the IRS instructions for 1099-Int, the bank, credit union, brokerage, etc. must file a 1099-Int any time it pays $10 or more in box 1 (interest), box 3 (interest on treasuries, savings bonds, etc.) and box 8 (tax-exempt interest).
Re: IRS included interest on refund
Info_Hound - That's interesting. We haven't received letters notifying us of changes to our 2020 returns, just received more that asked. Maybe its too soon? The amounts calculate spot on to 3% so I'm confident its interest, but notification would be prudent.
I also did not receive a letter for the previous return I mentioned, although the interest in that case was just a buck and change. I was anticipating a letter since the IRS indicates a letter would be provided if changes are made to a return. One never arrived and quite frankly I forgot about it until it happened again this year and this reading this thread. Its good to know why the refunds are higher for future reference.
I also did not receive a letter for the previous return I mentioned, although the interest in that case was just a buck and change. I was anticipating a letter since the IRS indicates a letter would be provided if changes are made to a return. One never arrived and quite frankly I forgot about it until it happened again this year and this reading this thread. Its good to know why the refunds are higher for future reference.
"Better is the enemy of good." Good is good.
Re: IRS included interest on refund
When the IRS adds interest to a tax refund, that does not constitute making a change to the tax return.Nver2Late wrote: ↑Sat Jun 05, 2021 11:17 am Info_Hound - That's interesting. We haven't received letters notifying us of changes to our 2020 returns, just received more that asked. Maybe its too soon? The amounts calculate spot on to 3% so I'm confident its interest, but notification would be prudent.
I also did not receive a letter for the previous return I mentioned, although the interest in that case was just a buck and change. I was anticipating a letter since the IRS indicates a letter would be provided if changes are made to a return. One never arrived and quite frankly I forgot about it until it happened again this year and this reading this thread. Its good to know why the refunds are higher for future reference.
- dratkinson
- Posts: 6116
- Joined: Thu Jul 26, 2007 6:23 pm
- Location: Centennial CO
Re: IRS included interest on refund
My 2019 refund was delayed (covid), I did receive an amount (~$13) above what was expected, and a 2020 1099INT. Reported 1099INT on 2020 return.
My 2020 refund included a small amount (~$2) above what was expected. I'm guessing it was interest, or maybe something to do with "economic impact payment".
If uncle sugar doesn't send a 2020 1099INT identifying interest payment (~$2), how would I get the tax s/w to accept the input without the information* required to identity the payment? (* Would expect omitted data to cause the tax s/w audit feature to complain, because I recall the tax s/w required some of the 1099INT box information to be entered, so assume a "blank" to be an unacceptable input.)
Just trying to get ahead of the power curve.
I suppose if I don't receive a 2021 1099INT, I could copy the information from my 2019 1099INT. But that doesn't seem to be a good answer, as it doesn't help the folks who've never received an IRS 1099INT interest payment.
My 2020 refund included a small amount (~$2) above what was expected. I'm guessing it was interest, or maybe something to do with "economic impact payment".
If uncle sugar doesn't send a 2020 1099INT identifying interest payment (~$2), how would I get the tax s/w to accept the input without the information* required to identity the payment? (* Would expect omitted data to cause the tax s/w audit feature to complain, because I recall the tax s/w required some of the 1099INT box information to be entered, so assume a "blank" to be an unacceptable input.)
Just trying to get ahead of the power curve.
I suppose if I don't receive a 2021 1099INT, I could copy the information from my 2019 1099INT. But that doesn't seem to be a good answer, as it doesn't help the folks who've never received an IRS 1099INT interest payment.
Last edited by dratkinson on Sat Jun 05, 2021 5:49 pm, edited 1 time in total.
d.r.a., not dr.a. | I'm a novice investor; you are forewarned.
Re: IRS included interest on refund
My tax software doesn't need a 1099-INT to report 1099-INT interest. I think yours doesn't as well.
- dratkinson
- Posts: 6116
- Joined: Thu Jul 26, 2007 6:23 pm
- Location: Centennial CO
Re: IRS included interest on refund
Okay. I'll create my own blank 1099memo as a reminder. See if the 2021 tax s/w accepts it.
Added. Went back and looked through my 2020 tax return documents.
For interest income earned (~$13) in 2020, due to delayed 2019 fed tax refund...
2020 IRS 1099INT showed:
--Statement showing interest income from Internal Revenue Service (Please keep this copy for your records)
--Calendar Year 2020
--my SSN and amount earned
--(IRS) Payer's Federal identification number: 38-1798424
So if I don't get a 2021 IRS 1099INT for ~$2 earned on delayed 2020 refund, I'll try entering the amount first without the IRS payer's fed ID number to see if the tax s/w will accept it.
Added. Went back and looked through my 2020 tax return documents.
For interest income earned (~$13) in 2020, due to delayed 2019 fed tax refund...
2020 IRS 1099INT showed:
--Statement showing interest income from Internal Revenue Service (Please keep this copy for your records)
--Calendar Year 2020
--my SSN and amount earned
--(IRS) Payer's Federal identification number: 38-1798424
So if I don't get a 2021 IRS 1099INT for ~$2 earned on delayed 2020 refund, I'll try entering the amount first without the IRS payer's fed ID number to see if the tax s/w will accept it.
Last edited by dratkinson on Mon Jun 07, 2021 5:32 am, edited 2 times in total.
d.r.a., not dr.a. | I'm a novice investor; you are forewarned.
- Info_Hound
- Posts: 421
- Joined: Wed Mar 23, 2011 9:47 am
- Location: Threw a dart in a map and moved
Re: IRS included interest on refund
Since this is new territory for me I have no idea how this works. When they finally processed my 2020 return, the refund was deposited with my bank. It was about 5 weeks later that I received written notification from the IRS as to why my tax refund had been adjusted.Nver2Late wrote: ↑Sat Jun 05, 2021 11:17 am Info_Hound - That's interesting. We haven't received letters notifying us of changes to our 2020 returns, just received more that asked. Maybe its too soon? The amounts calculate spot on to 3% so I'm confident its interest, but notification would be prudent.
- RustyShackleford
- Posts: 1682
- Joined: Thu Sep 13, 2007 12:32 pm
- Location: NC
Re: IRS included interest on refund
I like to think that reporting income that isn't reported to the IRS - primarily dividends and income that are below the $10 threshold for issuance of a 1099 - earns me "brownie points" as a "straight shooter" with the IRS. But no. I'm now dealing with my 3rd CP2000 notice. The first two netted the IRS not a single penny, and I'm morally certain that the current (third) won't either.
Fed Tax Refund - more than what I filed for
[Thread merged into here --admin LadyGeek]
I just received a Fed tax refund of $2809 but when I filed I calculated a refund amount of $2798. Did the IRS calculate on my behalf and gave me the correct refund ? Would I receive any explanation of the delta ?
I just received a Fed tax refund of $2809 but when I filed I calculated a refund amount of $2798. Did the IRS calculate on my behalf and gave me the correct refund ? Would I receive any explanation of the delta ?
Re: Fed Tax Refund - more than what I filed for
My guess is interest. The numbers are close.
Apr 17-June 10, about 54 days
$2798 x 3% interest = $83.94
$83.94/365 days = .2299726 x 54 days = $12.41
$2809 - $2798 = $11
Rounding error?
Apr 17-June 10, about 54 days
$2798 x 3% interest = $83.94
$83.94/365 days = .2299726 x 54 days = $12.41
$2809 - $2798 = $11
Rounding error?
Re: Fed Tax Refund - more than what I filed for
I think interest is a one way thing. IRS does not pay us interest.
Every year I get back refund exactly the same amount which I filed for.
Every year I get back refund exactly the same amount which I filed for.
Re: Fed Tax Refund - more than what I filed for
In normal years, don’t you get interest if the refund arrives more than 45 days after the filing deadline? Not sure how that works with the delayed deadline this year.
Re: IRS included interest on refund
I merged viewer0's thread into a similar discussion.
Re: IRS included interest on refund
Now I have to pay tax on the interest ? would IRS send me a 1099 something ?
-
- Posts: 3187
- Joined: Tue Dec 21, 2010 2:55 pm
Re: IRS included interest on refund
Yes you do have to pay taxes on it
I did not receive 1099-int form. I just entered the extra amount
Last years interest rate was MUCH better than this years 3%
I did not receive 1099-int form. I just entered the extra amount
Last years interest rate was MUCH better than this years 3%
Re: IRS included interest on refund
Received 1099-INT from IRS today.
"Better is the enemy of good." Good is good.
Re: IRS included interest on refund
got one today for 53 bucks this is kind of annoying.