Refund

[ftris]

Has anyone heard about the IRS supposedly paying 5% interest on all late refunds?

My husband read it on Google news. 🤷

[rjs]

The IRS does pay interest on refunds that are paid late. The interest rate changes each quarter. It is 5% for the first two quarters of 2020, and 3% for the third quarter. The rate for the fourth quarter has not been determined yet.

The interest that the IRS pays on late refunds is taxable income, just like interest from a bank account. They will send a Form 1099-INT at the end of the year, and you have to report the interest as income on your 2020 tax return.