If one overpaid the amount of tax due in 2001 and will receive a refund, is interest paid on the amount of overpayment? If so, what is the rate of interest?
If one overpaid the amount of tax due in 2001 and will receive a refund, is interest paid on the amount of overpayment? Not unless the refund is paid more than 60 (or 45--I can't remember which) days after the later of 4/15/2002 or the date the return is filed. The interest rate bounces around. I think it's 6% right now.Phil Marti
There is no interest paid on refunds. The state and federal goverments use the money freely and will pay it back as a refund interest free.Have a good dayWalter
Walter, obviously having not read Phil's reply to this post, wrote:There is no interest paid on refunds.That's true in the ordinary course of events when a refund is made promptly. There are times, however, when the feds are late processing the refund. Federal law generally provides for interest on your refund if it is not paid within 45 days of the date you filed your return or claimed the refund. As Phil pointed out, the interest rate used varies.For verification, just read IRS Publication 1, "Your Rights as a Taxpayer," available for download at http://www.irs.gov/forms_pubs/pubs.htmlRegards..Pixy
Sorry for the incomplete answer. I was thinking in terms of the normal refund and had forgotten about the time limit on mailing out the refunds. Yes, any refunds mailed after the time deadline will have interest. Thanks Phil for correcting me.Have a nice dayWalter
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