A small payment from the IRS may be coming your way in the near future. The tax agency announced it was sending interest payments to those who filed their 2019 returns by this year’s extended July 15 deadline and either received a refund in the past three months or will receive a refund.
An estimated 13.9 million individual taxpayers are set to receive the payments that average about $18 each. In most cases, if you receive your refund by direct deposit and qualify for the interest payment, the money will be deposited directly into the same account. Everyone else will receive a paper check with the note “INT Amount” on it.
The interest payments are being made due to the COVID-19 related deadline extension. When a disaster-related postponement occurs, the law requires the IRS to pay interest on refunds, calculated from the original April 15 filing deadline. This is true as long as an individual files a 2019 federal income tax return by the postponed deadline, which, in this case, was July 15, 2020. This refund interest requirement only applies to individual income tax filers. Businesses aren’t eligible.
The interest payments are taxable, and you’ll need to report it on your 2020 federal income tax return. The IRS will send those who received a payment over $10 a 1099-INT sometime early next year.