Interest rates

IRS tax refunds: what are the interest rates for deferred refunds?

MMost Americans have already filed their taxes, doing so before the April 18 deadline to submit their 2021 declarationsso they may be wondering why they haven’t received their tax refund yet.

Although tax season for 2022 has already begun, the Tax Service (IRS) would still be behind by about eight million tax returns that had not been processed since 2020.

CBS News reported that as of April there were approximately 15 million unprocessed tax returns from the past two years.

What are the interest rates for deferred tax refunds?

The National Director of Tax Technical Services of CBIZ Inc., Bill Smithclaimed that the majority of Americans may not be aware that the IRS pays interest on delayed refunds.

“I would add that they probably don’t care that much because usually it’s not going to be a big number,” he noted.

“The sooner they get their money from the government, the happier they are.”

Why is interest on tax returns good news?

While it’s true that people just want to get their refunds as soon as possible, the good news is that the IRS will pay four percent interest for those who wait over a month and a half to receive their refunds. . .

The IRS tends to increase this interest rate in line with inflation, which means deferred repayment rates could reach 6% by the end of this calendar year.

“People prefer to have their reimbursement on time”, Rob Burnettfinancial advisor and CEO of Outlook Financial Center in Troy, Ohio, told CBS News.

“If you have $3,000 or $4,000 coming up, a few hundred extra dollars won’t do much.”

According to reports, the IRS paid up to $3.3 billion in interest for delayed refunds last year.