People are anxiously waiting for the second stimulus checks. However, if the latest developments are anything to go by, there might not be another round of checks. People may or may not get another coronavirus stimulus check, but some taxpayers may get another check from the IRS, and it is the interest check.
Coronavirus stimulus checks and interest check: what's the difference?
Those who didn’t get their income tax refund by April 15 may get this interest check from the IRS. This interest check is not any type of coronavirus stimulus, rather it is because of the delay in processing the refunds.
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“The interest payments, averaging about $18, will be made to individual taxpayers who filed a 2019 return by this year's July 15 deadline and either received a refund in the past three months or will receive a refund,” the IRS said in a press release last month.
Usually, the IRS gives interest on refunds if it takes more than the typical processing time. The interest starts accruing from April 15 until the day the IRS sends you the return check. This year, however, things got delayed due to the coronavirus pandemic. In June, the agency said it has a backlog of 4.7 million returns.
Due to the coronavirus pandemic, the IRS moved the filing due date from April 15 to July 15. Even though the filing due date was moved, for the purpose of interest, the accrual period began on April 15 (even if you didn't file until July 15).
This means that people filing their tax return later get a slight advantage over those filing earlier. Moreover, the backlog of returns would mean the agency could take more time to process the return, and in turn, you get more interest on your refund.
How much will you get?
Not all taxpayers will get this interest check from the IRS. Only those who didn’t get their tax refund by April 15 will be eligible to get this interest check.
Last month, the agency informed that it would be sending interest payments to about 13.9 million individual taxpayers. Those who get their refund through direct deposit will get the interest in the same way. Others will get a check. The interest check will carry a notation “INT Amount" to suggest it is a refund interest payment and not the coronavirus stimulus check.
Talking of how much you could get in interest payment, it mainly depends on your refund amount. The IRS pays a 5% interest compounded daily through June 30. Then from July, the interest rate drops to 3%.
For example, if you have a refund of $1,000, then for the period between April 15 and June 30, you can expect an interest payment of 14 cents a day. From July, the interest payment drops to 8 cents per day, according to CNET.