IRS included interest on refund

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RustyShackleford
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IRS included interest on refund

Post by RustyShackleford »

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.
Nver2Late
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Re: IRS included interest on refund

Post by Nver2Late »

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.
nalor511
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Re: IRS included interest on refund

Post by nalor511 »

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.
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 law
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Re: IRS included interest on refund

Post by RustyShackleford »

nalor511 wrote: Fri May 21, 2021 2:00 am
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.
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 law
But like I said, my refund was issued less than 45 days (less than 30 days, in fact) from April 15.
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Re: IRS included interest on refund

Post by trueblueky »

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.
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Re: IRS included interest on refund

Post by nalor511 »

RustyShackleford wrote: Wed Jun 02, 2021 7:04 pm
nalor511 wrote: Fri May 21, 2021 2:00 am
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.
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 law
But like I said, my refund was issued less than 45 days (less than 30 days, in fact) from April 15.
So was mine. Shrug.
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Re: IRS included interest on refund

Post by livesoft »

It's a trap!

The IRS is going to check that you noted the interest next year when you file your 2021 tax return.
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Re: IRS included interest on refund

Post by MarkNYC »

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.
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.

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.
sport
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Re: IRS included interest on refund

Post by sport »

I received my refund on 5/19. I received almost $3 more than I claimed for my refund.
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Re: IRS included interest on refund

Post by secondcor521 »

livesoft wrote: Wed Jun 02, 2021 9:16 pm It's a trap!

The IRS is going to check that you noted the interest next year when you file your 2021 tax return.
@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.
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Re: IRS included interest on refund

Post by MarkNYC »

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.
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.
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Re: IRS included interest on refund

Post by RustyShackleford »

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.
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.
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Re: IRS included interest on refund

Post by MarkNYC »

RustyShackleford wrote: Thu Jun 03, 2021 7:48 pm
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.
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.
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.
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Re: IRS included interest on refund

Post by jimmyg »

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.
TheDogFather
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Re: IRS included interest on refund

Post by TheDogFather »

I got my refund today with 3% interest from April 15 appears to explain the amount I received.
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Re: IRS included interest on refund

Post by Zonian59 »

livesoft wrote: Wed Jun 02, 2021 9:16 pm It's a trap!

The IRS is going to check that you noted the interest next year when you file your 2021 tax return.
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.
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Re: IRS included interest on refund

Post by Info_Hound »

livesoft wrote: Wed Jun 02, 2021 9:16 pm It's a trap!

The IRS is going to check that you noted the interest next year when you file your 2021 tax return.
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)
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Re: IRS included interest on refund

Post by alpenglow »

Info_Hound wrote: Fri Jun 04, 2021 9:29 am
livesoft wrote: Wed Jun 02, 2021 9:16 pm It's a trap!

The IRS is going to check that you noted the interest next year when you file your 2021 tax return.
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)
Either way you should declare it. I'll be including my $5.95 on next year's taxes.
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Re: IRS included interest on refund

Post by Nver2Late »

Info_Hound wrote: Fri Jun 04, 2021 9:29 am
livesoft wrote: Wed Jun 02, 2021 9:16 pm It's a trap!

The IRS is going to check that you noted the interest next year when you file your 2021 tax return.
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)

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.
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Re: IRS included interest on refund

Post by trueblueky »

Info_Hound wrote: Fri Jun 04, 2021 9:29 am
livesoft wrote: Wed Jun 02, 2021 9:16 pm It's a trap!

The IRS is going to check that you noted the interest next year when you file your 2021 tax return.
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.
Taxpayers must declare all interest.

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).
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Re: IRS included interest on refund

Post by Info_Hound »

I think the problem is that for direct deposit, there is no letter from the IRS explaining why the refund is higher.
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.
trueblueky wrote: Fri Jun 04, 2021 3:55 pm
Info_Hound wrote: Fri Jun 04, 2021 9:29 am
livesoft wrote: Wed Jun 02, 2021 9:16 pm It's a trap!

The IRS is going to check that you noted the interest next year when you file your 2021 tax return.
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.
Taxpayers must declare all interest.

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).
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.
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Re: IRS included interest on refund

Post by Nver2Late »

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.
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Re: IRS included interest on refund

Post by MarkNYC »

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.
When the IRS adds interest to a tax refund, that does not constitute making a change to the tax return.
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Re: IRS included interest on refund

Post by dratkinson »

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.
Last edited by dratkinson on Sat Jun 05, 2021 5:49 pm, edited 1 time in total.
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livesoft
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Re: IRS included interest on refund

Post by livesoft »

My tax software doesn't need a 1099-INT to report 1099-INT interest. I think yours doesn't as well.
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Re: IRS included interest on refund

Post by dratkinson »

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.
Last edited by dratkinson on Mon Jun 07, 2021 5:32 am, edited 2 times in total.
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Re: IRS included interest on refund

Post by Info_Hound »

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.
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.
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Re: IRS included interest on refund

Post by RustyShackleford »

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.
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Fed Tax Refund - more than what I filed for

Post by viewer0 »

[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 ?
epargnant
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Re: Fed Tax Refund - more than what I filed for

Post by epargnant »

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?
viewer0
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Re: Fed Tax Refund - more than what I filed for

Post by viewer0 »

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.
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Re: Fed Tax Refund - more than what I filed for

Post by gac1979 »

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.
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Re: Fed Tax Refund - more than what I filed for

Post by epargnant »

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Re: Fed Tax Refund - more than what I filed for

Post by alpenglow »

viewer0 wrote: Thu Jun 10, 2021 12:48 pm 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.
I checked the transcript on my IRS account and it stated that it was interest.
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Re: IRS included interest on refund

Post by LadyGeek »

I merged viewer0's thread into a similar discussion.
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Re: IRS included interest on refund

Post by pshonore »

LadyGeek wrote: Thu Jun 10, 2021 1:59 pm I merged viewer0's thread into a similar discussion.
My return was filed and accepted on 4/17. Still no refund - part of refund is I Bonds. Wonder if they'll pay interest on those or just the cash?
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Re: IRS included interest on refund

Post by viewer0 »

Now I have to pay tax on the interest ? would IRS send me a 1099 something ?
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