Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Level 2
posted Apr 15, 2024 7:47:52 AM

Overpayment Interest

Overpayment interest for tax refund is currently 8% compounded daily which is much higher than bank interest rate for deposits which is around 5%. Would it be a good idea if you can delay filing taxes (3 years maximum) so that you get a better return on the tax refund? (Assuming you do have tax refund and you wouldn't need the money right away.)

0 3 2596
3 Replies
Expert Alumni
Apr 15, 2024 7:56:10 AM

Not a good idea.

Stop and Start Dates for Overpayment Interest

In general, we pay interest on the amount you overpay starting from the later of the:

  • Tax return filing due date
  • Late filed tax return received date
  • Date we get your return in a format we can process
  • Date the payment was made

We stop paying interest on overpayments on the date we refund your overpayment (and interest) or offset it to an outstanding liability.

 

Exception: We have administrative time (typically 45 days) to issue your refund without paying interest on it.

 

For confirmation and more details see IRS Interest.

Level 2
Apr 15, 2024 7:58:35 AM

No. That rate is subject to change at any moment and there are dozens of benefits from having a tax return on file. 

 

There are also possible reporting penalties for certain types of healthcare

Level 1
Apr 15, 2024 8:15:04 AM

Overpayment interest only goes into effect after you file your Federal return. Not filing for three years means the Fed makes out cause they have your tax return money for 3 years!