Stimulus checks: what is a tax refund interest check?
With millions of Americans waiting in hope that Democrats and Republicans can get something agreed in order to provide more money, some are due refunds this week.
The coronavirus crisis in the United States remains far from resolved and as much of the focus in the country turns to the presidential election, millions of Americans continue to wait for further financial support. But for those who filed their 2019 returns for federal income tax on time, a refund should be imminent.
Awaiting stimulus check
Following the Economic Impact Payments (EIPs) that were issued as part of the CARES Act relief package, there was believed to be a consensus across parties that a second payment was required as many families’ struggles go on. Republicans couldn’t stomach the HEROES Act so came up with the HEALS Act. That was too light for Democrats and the negotiations that followed failed to reach a compromise.
As we saw, President Donald Trump stepped in and signed off a number of executive orders, extending - at least in part - some of the provisions of the CARES Act. That said, there were no stimulus checks included in those orders, as Congress headed off for their summer recess.
While we await news on further financial aid, the Internal Revenue Service (IRS), along with the Treasury Department, has announced that it will send checks for tax interest to more than 13 million people across the country.
Through a statement, the IRS said that those taxpayers who filed by the 15 July deadline this year will receive additional money for accrued interest and this is in addition to the refund. Over 12 million people received the tax refund by direct deposit, and the interest payments starting in the coming days will simply be issued into the same accounts.
What is the tax refund interest check?
The check will be sent to the rest of the 13.9 million taxpayers who did not receive a refund through via a direct deposit. It will be identified with the term ‘INT Amount’ and will clearly show how much is being paid. It is important to remember that this will have to be reported on the 2020 income tax return filed in 2021.
The average interest payment will be about $18, with the agency paying out a total of around $250 million, and it only applies to individuals, not businesses.
The statement from the IRS advised that “this year's Covid-19-related July 15 due date is considered a disaster-related postponement of the filing deadline. Where a disaster-related postponement exists, the IRS is required, by law, to pay interest, calculated from the original April 15 filing deadline, as long as an individual files a 2019 federal income tax return by the postponed deadline − July 15, 2020, in this instance.
“Interest is paid at the legally prescribed rate that is adjusted quarterly. The rate for the second quarter ending June 30 was 5%, compounded daily. Effective July 1, the rate for the third quarterdropped to 3%, compounded daily.”
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