Tax Day fell on July 15 this year after the IRS postponed the traditional April 15 deadline because of the. And that’s just one of several unconventional policy maneuvers the federal government has undertaken to help struggling Americans during the pandemic. It also issued and boosted unemployment benefits by $600. The latter two measures remain in negotiations in Congress after the GOP unveiled its , which includes a and a .
Due to a change at the IRS, the tax deadline extension will provide some additional funding — at least for some taxpayers. In addition to having provided more time to fill out paperwork,and scrape together payments, the postponement will mean a few more dollars — in addition to the refunds — in the form of a second check from the government. Read on to find out if you can expect to receive a second payout from the IRS and when it might show up in your bank account or mailbox.
Why is the IRS sending a second check to some households?
Every year, the IRS pays interest on refunds that take extra time to process, with interest accruing from April 15 until whenever they cut your check (or drop your direct deposit). For those who haven’t received their refund check, you’re not alone. The IRS said back in June it had a backlog of 4.7 million returns.
This year, the interest accrual period began on April 15, as usual — even if you didn’t file until July 15. So, in effect, there was a modest but real advantage to filing later this year. Couple that with the IRS backlog, and it raise the likelihood of having additional funds from the government agency coming your way.
Who will receive a second check?
Taxpayers eligible for a refund — who didn’t receive it by April 15 — will accumulate some amount of interest. The sum of that interest may be sent out as a second check or direct deposit.
How much will I get?
As usual, the IRS will pay 5% annual interest, compounded daily through June 30. On July 1, the interest rate decreases to 3%. For every $1,000 due back to you, you can expect to collect about $0.14 in interest per day between April 15 and June 30 and $0.08 a day thereafter.
Is there a catch?
There’s always a catch.
“The interest is taxable,” said Pamela Lucina, chief fiduciary officer and head of the trust and advisory practice at Northern Trust Wealth Management. “This means you will receive a 1099-INT for 2019 and will pay taxes on it when you file your 2020 return.”
When will I get my second check?
The IRS says that the interest payment could be paid in a second check or direct deposit, though it could also be added into a forthcoming refund. There is no specific date set for when payments will be sent, but the agency says it will be later this summer.