If Your Refund’s Late, the IRS Might Owe You Interest

The IRS imposes plenty of consequences on taxpayers who miss the April tax filing deadline, including late-filing and late-payment penalties. But you get to hold the IRS accountable for missing a deadline, too.

The IRS has a deadline for paying refunds

Most taxpayers receive their refunds within three weeks of e-filing, but it can take longer in some cases, especially if your return wasn’t submitted correctly or there’s a mistake you need to fix.

However, if the IRS doesn’t issue your refund within 45 days of the tax deadline, it owes you interest for each additional day it's late.

For those who file after the deadline, the clock starts on the date you filed, not April 15. But keep in mind that there are limitations: filing two years late and finding out you were owed a refund the whole time doesn’t entitle you to two years of interest.

» MORE: What happens if you don’t file taxes, or file taxes late?

You won’t have to bill the IRS

The IRS should keep you informed of major developments in your refund process and track the interest it owes you if your funds are running late. But if you're curious, there are two major ways you can keep an eye on your refund:

• You can track the status of your federal refund about 24 hours after it receives your e-filed return or four weeks after you mail a paper return. The IRS updates the site once a day, and it indicates whether your return was received, approved or sent.

• If it has been at least three weeks since you e-filed or more than six weeks since you mailed your paper return, you can check on your refund by calling the IRS. According to the IRS, call wait times average around three minutes during the tax filing season and 11 minutes during the offseason.

Taxpayers who think they’ve been shorted on interest can call the IRS Taxpayer Advocate Service at 877-777-4778 or visit a local IRS office.

» MORE: Tips to lower your tax bill

How much interest does the IRS pay on a delayed refund?

If you haven't received your refund within 45 days of the tax deadline, the IRS pays interest on your outstanding funds at the prevailing overpayment rate, with interest compounding daily.

The current interest rate for overpayments is 8%, which is relatively high compared with previous years. However, this rate can change quarterly, so check the IRS website for the latest update^[0]

Keep in mind that any interest you cash in from a delayed refund comes with some fine print: you’ll need to report it as taxable income on your return the following year, no matter the amount. If you received more than $10, you'll also get a 1099-INT from the IRS, which can help with that paperwork.

Refund theft can complicate interest payments

If you discover a criminal has filed a fraudulent return in the hopes of stealing your refund — a growing concern for many taxpayers as IRS scams increase — you should alert the IRS right away. But note that those investigations typically take about four months, and it’s unclear whether a refund due to a victim of identity theft accrues interest if it’s delayed.

» MORE: How to get an identity protection PIN from the IRS