You Might Wish You Hadn’t Received Your Tax Refund Yet
As taxpayers, we know that if we owe the IRS money and don’t pay on time, we’re going to be charged interest. Well, let’s turn the tables. Wouldn’t it be nice if the IRS had to pay you interest if they don’t get your tax refund to you on time? Even though most taxpayers don’t realize it, the IRS does have to pay interest if they don’t get your refund to you within 45 days of processing your return. Interest begins to accrue from that 45-day mark forward.
In 2021, the IRS paid out $3.3 billion in interest to tax filers. This year they are so far behind that they are raising the interest rates it pays to individual tax filers who are still waiting on their refunds from 3% to 4%. That’s way more than you get in any bank these days! For corporate filers waiting on large refunds, the interest rate is up to 1.5% from 0.5%. That’s huge!
Without questions, there are going to be a lot of tax filers receiving more than expected instead of giving to the IRS this year. One source reported that, “As of April 29, the agency has 9.6 million unprocessed individual tax returns, some from tax year 2020 and some from 2021. The agency says it hopes to clear the backlog by the end of the calendar year.”
The IRS will be paying out billions more in interest this year than they did in 2021. For those who did get a refund this year, it almost makes you wish you hadn’t received it yet! This is one time for certain those who didn’t get their refund yet will be saying better late than never.