You should have received all your 2020 tax forms. It is important to know what each form means, why you received it, and if you need to report it to the IRS. One form you may have received this year is a Form 1099-INT from the IRS. This form is reporting interest income paid to you by the IRS.
Last year, the IRS sent interest payments averaging about $18 to approximately 13.9 million individuals who received a refund from their 2019 tax return.
Due to the COVID-19 disaster-related postponement of the filing deadline for the 2019 tax year, the IRS was required to pay interest calculated from the original April 15 due date if you received a refund after April 15 but filed by the July 15 deadline. The interest was calculated based on the prescribed rate that adjusts quarterly.
However, interest was not added to your refund if the IRS issued it before the April 15 deadline. Typically, there is a 45-day rule where the IRS is only required to add interest to refunds on timely-filed refund claims issued more than 45 days after the return due date. The 45-day rule applied to refunds issued before April 15 and for tax returns filed after the July 15 deadline.
Most of these interest payments were issued separately from the 2019 tax refunds. Taxpayers who received their 2019 refund by direct deposit received the interest payment the same way. If you received you refund by check, there was a notation on the check saying “INT Amount”.
These interest payments are taxable and need to be reported on your 2020 federal income tax return.
So, why did you receive a 1099-INT from the IRS?
- You filed a 2019 federal income tax return by July 15 deadline and
- You received a refund after April 15, 2019 and
- The interest totaled at least $10
For more information on IRS payments or if you have a tax issue, contact your Henry+Horne advisor.