Does The IRS Owe Me Interest on My Refund?
We all know how quickly the IRS will tack on penalties and interest fees if you are late filing or paying your taxes. But what happens if the IRS doesn’t send your money to you in a reasonable amount of time? Are they required to pay penalties and interest, too? Although the IRS won’t face any penalties, per se, you might be surprised to learn that it will pay interest if your tax refund is delayed.
Key Takeaways
The IRS may owe you interest if your refund is delayed. If the IRS takes more than 45 days after the filing deadline (or after receiving a late or amended return) to issue your refund, it is required to pay interest on the amount owed.
Interest accrues daily and varies by IRS rates. Refund interest is compounded daily and continues to build until the refund is paid. The rate changes quarterly, so the total interest you receive depends on how long the delay lasts and the current IRS interest rate.
Refund interest is taxable and can be disputed if incorrect. Any interest paid by the IRS must be reported as taxable income. If you believe the IRS miscalculated your interest, you can request a correction by submitting a written claim or filing Form 843 within six years.
When Will The IRS Pay Interest on a Delayed Tax Refund?
As we previously stated, the IRS will pay interest on late refunds. The question is, however, when is a tax refund considered late?
The IRS has up to 45 days to disburse your tax refund, as long as your tax return is filed on time. Additionally, the clock for the 45 days doesn’t typically begin from the date you submitted your return or even when the IRS started processing it. Generally, the 45-day rule kicks in after the filing deadline, which is usually April 15. That means that the IRS typically has until the beginning of June to get your refund to you.
Filed late? The clock won’t start until the date the IRS receives your return. The same goes for amended returns; if you file corrections, it resets the clock.
How Much Extra Money Will I Get?
Interest on late tax refunds varies based on the current IRS rate. The amount is compounded daily and continues to accrue until your refund is disbursed.
For example, if you filed before April 15, 2025, and the IRS owed you $1,200 but took nearly six (6) months to send your refund after the 45-day deadline, it would owe you $1,248.97. That’s based on the 8% interest rate in 2025.
| Month | Interest Due | Ending Balance |
| 1 | $8.03 | $1,208.03 |
| 2 | $8.08 | $1,216.11 |
| 3 | $8.13 | $1,224.24 |
| 4 | $8.19 | $1,232.43 |
| 5 | $8.24 | $1,240.67 |
| 6 | $8.30 | $1,248.97 |
The IRS interest rate adjusts quarterly, so the amount you receive in interest could be more or less, depending on the current rate.
What If I Disagree With The Amount Sent?
If you believe the IRS did not send the correct amount in interest fees, you may file an informal claim by submitting a letter to them. It should outline the disputed amount and include any factual or legal basis for your claim. You can also submit Form 843, Claim for Refund and Request for Abatement. Just be sure to include your reasoning for the additional interest on line 7 of the form. Any request for reconsideration must be made within six (6) years of your scheduled refund.
Will I Owe Taxes on The Interest?
No surprise here – the IRS giveth and they taketh away. Unfortunately, any interest received with your refund must be reported as taxable income when you file next year. If the interest amount exceeds $10, the IRS will most likely send you a 1099-INT form. Even if you don’t get a 1099-INT, you’re still required to claim the interest and pay taxes on it.
Late Refund? Follow These Steps
If your tax refund is still nowhere to be found, there are a few things you can do to track it down:
- Use the “Where’s My Refund” tool on the IRS website or download the IRS2Go mobile app to track your money.
- Call the IRS. If you filed on time and it’s past the 45-day deadline, or it’s been at least three (3) weeks since you filed a late return, you can call 800-829-1040 to ask about the status of your refund.
- Initiate a trace. For tax returns more than 12 weeks late, request a refund trace by calling 800-829-1954 or submit Form 3911, Taxpayer Statement Regarding Refund.
By familiarizing yourself with the process and your rights as a taxpayer, you can help ensure you receive not only the refund you’re entitled to, but also any applicable interest payments.
If your tax refund has been delayed or you have questions about potential interest owed, it may be beneficial to consult a tax professional or work with a trusted tax preparation service. They can offer tailored guidance, help file any necessary claims, and make sure you receive the full amount the IRS owes you.