By Payroll and Entitlements Editorial Staff
The IRS has updated the FAQs on Coronavirus Tax ReliefCARES Act and relief payments. (IRS FAQs, August 21, 2020.)
Coronavirus Tax Relief: Interest on 2019 Tax Refunds FAQs
Q1. Can I use the “Where's My Refund” system to see if I will receive a refund interest payment?
No, the 2019 refund interest is not part of the “Where's My Refund” application.
Q2. How much are the refund interest payments?
The average refund interest amount is $18, but the amount for each taxpayer varies based on the tax refund that the taxpayer receives.
Interest is paid at the legally prescribed rate that is adjusted quarterly. The rate for a noncorporate taxpayer for the second quarter, which ended June 30, 2020, was 5%, compounded daily. Effective July 1, 2020 the rate for the third quarter dropped to 3%, compounded daily.
Q3. When will the interest refund payments be issued?
The IRS will start issuing refund interest payments on August 19, 2020. Most eligible taxpayers will receive a payment before August 28, 2020.
Q4. What if I no longer have the account where my tax refund was direct deposited?
If we issue a direct deposit and the bank information is invalid or the bank account has been closed, the bank will reject the deposit. We will then mail you a paper check as soon as possible to the address we have on file for you. Typically, once the payment is mailed, it will take up to 14 days to receive the payment, standard mailing time.
Q5. I have not received my 2019 refund yet, will refund interest payment come with refund payment?
Most tax refund payments will be issued separately from the refund interest payment. The refund interest, if issued by paper check, will include a notation on the check (INT Amount) that identifies it as a refund interest payment.
Q6. How do I update my address to receive check payment?
You can use Form 8822, Change of Address to notify the Internal Revenue Service if you changed your home mailing address.
If the IRS receives your payment back because the Post Office was unable to deliver it, we will hold your refund interest payment until we receive your updated address.
Q7. Are the refund interest payments taxable income?
Yes. The 2019 refund interest payments are taxable, and taxpayers must report the interest on their 2020 federal income tax return. The IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10.
Q8. When will the 1099-INT be issued for refund interest payment?
Form 1099-INT on interest over $10 paid during the year will be issued no later than February 1, 2021.
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