Haven’t received your tax refund yet? Starting July 1, the IRS will pay you more in interest
Right on schedule, the IRS is behind on processing millions of tax returns from 2021.
That’s frustrating for taxpayers waiting on their refunds, which have averaged over $3,000 this year. But there’s one bit of good news: Generally, if your refund is delayed more than 45 days, the IRS will pay interest on the total. Even better: Starting July 1, the interest increases from 4% to 5%, compounded daily.
There are numerous reasons the agency has fallen behind, including being short-staffed, still needing to catch up from 2020’s backlog, and accounting for tax changes made in COVID-19 stimulus legislation. Additionally, it may take longer for agents to process paper returns and those with errors, which they need to do by hand.
Before the filing season even began, the IRS predicted that returns would be delayed this year. But the backlog should be cleared before the end of the year, IRS Commissioner Charles Rettig told lawmakers during an appearance in front of the House Ways and Means Committee in March.
How to track your refund
Taxpayers can track the status of their tax refunds using the IRS Where’s My Refund tool. In the past, this tool could only be used to track the current tax year, but it was recently upgraded it so that users can track this year’s (2021) and the previous two years’ refunds. If you haven’t received refunds from 2019, 2020, and/or 2021, you might be able to find more info here. You’ll need to provide your Social Security number and the exact amount of the refund.
The IRS paid out $3.3 billion in interest to taxpayers in fiscal year 2021, according to a Government Accountability Office report. That’s triple the interest the agency paid in 2015.
Don’t forget: The interest is taxable. If you get more than $10, you’ll receive Form 1099-INT from the IRS, and you’ll need to report the interest on your 2022 federal income tax return.
Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.