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If you’re still waiting for a tax refund, there’s a silver lining: You may be accruing interest, and the rate goes up from 4% to 5% on July 1, according to the agency’s report. last quarterly adjustment.
The IRS generally has 45 days after the filing deadline to process returns and send refunds. After that, the agency adds daily compound interest, explained Tommy Lucas, certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
While this sounds good, there is a catch: your interest is taxable.
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IRS interest payments soared to $3.3 billion in fiscal year 2021, up 33% from 2020 for individual returns, the US Government Accountability Office reports. reported.
The easiest way to check the status of a refund is through the “Where’s my refund?” online tool or using the IRS2Go App. The portal displays three steps: receipt acknowledgment, refund approval, and if the refund was submitted, with an estimated deposit date.
The IRS recently updated the portal to include 2019 and 2020 tax returns, said Phyllis Jo Kubey, a New York-based registered agent and president of the New York State Society of Registered Agents.
“Prior to this update, the online refund inquiry only covered current year refunds, meaning anyone inquiring about a prior year refund had to call the IRS,” he said.
High call volumes have been an ongoing problem with many taxpayers struggling to communicate with IRS agents. During the first half of 2021, there were fewer than 15,000 employees to handle more than 240 million calls: one agent for every 16,000 calls, according to the National Taxpayer Advocacy.
“I hope this is the start of more improvements to the IRS’s online refund lookup tools, and I look forward to seeing more improvements,” Kubey said.
It was a tough period for the IRS as the agency struggles with pandemic-related delays.
The IRS began 2022 with about 8.2 million paper returns, and as of May 6, there were 1.7 million left, Ken Corbin, the agency’s director of taxpayer experience, told the House Oversight Subcommittee in May.
“Our goal is to get the IRS back to a pre-pandemic state,” he said. “We have to process this document so we can get back in the business of providing the service taxpayers deserve.”
IRS Commissioner Charles Rettig told House lawmakers in March that expect the backlog to be removed by the end of 2022.