Tax Refund Money: The IRS Could Owe You Interest if Your Return Is Late
If you haven’t received your tax refund yet, your return might be one of the nearly ten thousand unprocessed filings that the Internal Revenue Service is currently working on. On a positive note, you might be owed money due to the delay.
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Although the agency is quick to charge you late-filing or late-payment penalties and interest on unpaid tax bills, you may be able to receive money from them if you don’t receive your return by their mandated due date.
As returns pile up at the IRS, millions of taxpayers are experiencing refund delays beyond the standard 21-day turnaround for E-filed returns with a direct deposit refund. If you do not receive your refund within 45 days of filing, the IRS is obliged to pay you interest for each additional day (if you filed by the IRS tax deadline day on April 18).
The second quarter return is an acceptable interest return of 4%, and interest compounds daily. According to Newsbreak, in 2020, almost 14 million taxpayers received interest payments of $18 on average. However, if you receive interest on your refund, it is taxable and will require filling out Form 1099-INT on your 2022 tax return for interest payments more than $10.
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Obviously, returns with errors or those affected by fraud or identity theft will have to be investigated and processed manually, thus taking longer than expected. As the IRS is quick to point out on its website, many delays are also due to corrections to returns involving government assistance programs such as the Child Tax Credit, the Recovery Rebate Credit, the Earned Income Credit or the Additional Child Tax Credit. The IRS states that these could take up to 14 weeks to prepare.
According to IRS.gov, the agency has 9.8 million individual tax returns still unprocessed as of May 14. Included in this latest total are 2.4 million filings that require corrections and 7.4 million paper returns awaiting processing. The sum also includes returns received in 2021 and new 2021 returns.
In its “Interim Results of the 2022 Filing Season” report released on May 2, the Treasury Inspector General for Tax Administration (TIGTA) provided recommendations to an IRS suffering from worker shortages and a massive backlog of tax returns left over from 2021. It predicts the IRS will receive 160.7 million individual income tax returns during the 2022 calendar year.
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The IRS will handle processing any interest owed, but you can always check on the status of your return at www.irs.gov/Refunds or contact the agency at 1-800-829-1040.
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