- If you’re still waiting for a refund, it will typically accrue interest, and the rate will increase to 5% on July 1, according to the IRS.
- If it takes more than 45 days after the filing deadline to process your return, the agency processes the interest.
- IRS interest payments grew to $3.3 billion in fiscal 2021, with a 33% spike from 2020 for individual returns.
If you’re still waiting for a tax refund, there’s a silver lining: It can accrue interest, and the rate rises from 4% to 5% on July 1, according to the agency. latest quarterly adjustments,
Typically, the IRS has 45 days after the deadline to file a return and send a refund. After that, the agency operates on daily compound interest, explained Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
Tied to the federal short-term rate, IRS interest currently falls below 8.3% annual inflation. But it’s still much higher than the average savings account.
While that sounds nice, there’s also a downside: Your interest is taxable.
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IRS interest payments rose to $3.3 billion in fiscal year 2021, a 33% increase from 2020 for individual returns, according to the U.S. Government Accountability Office informed of,
Easiest way to check refund status “Where’s my refund?” by using online tools or IRS2Go App, The portal shows three steps: return receipt, refund approval and if the refund was sent, along with an estimated deposit date.
Recently, the IRS updated the portal to include returns for 2019 and 2020, said Phyllis Joe Kube, a New York-based enrolled agent and president of the New York State Society of Enrolled Agents.
“Prior to this upgrade, online refund inquiries only covered current-year refunds, meaning anyone inquiring about prior-year refunds had to call the IRS.”
High call volume has been a constant issue with many taxpayers struggling to reach IRS agents. During the first half of 2021, there were fewer than 15,000 employees handling more than 240 million calls – one agent for every 16,000 calls, according to National Taxpayer Advocate,
“I anticipate this is the beginning of more growth in the IRS online refund inquiry tool, and I look forward to seeing further improvements,” Kube said.
It’s been a difficult period for the IRS as the agency wrestles with a backlog related to the pandemic.
The IRS started 2022 with about 8.2 million paper returns, and there were 1.7 million left by May 6, Ken Corbin, the agency’s chief taxpayer experience officer, told the House oversight subcommittee in May.
“Our goal is to get the IRS back to a state before the pandemic,” he said. “We have to process this paper so that we can get back in the business of providing the service taxpayers deserve.”
In March, IRS Commissioner Charles Ratting told House lawmakers he expected the backlog to be cleared by the end of 2022.
Credit: www.cnbc.com /