Interest Received on 2021 Tax Refunds
During 2021, the IRS paid interest to many Americans who had to wait longer than usual for their 2020 federal tax refunds. Unlike the refunds themselves, most IRS interest payments are taxable income. However, many people may not know that they received an interest payment, since the IRS often included the interest with a taxpayer’s refund or applied it to tax owed.
If you received a federal tax refund during 2021, you may get Form 1099-INT in the mail from the IRS, showing any taxable interest paid to you. (You will not get this form if the IRS did not pay you any interest.) Store the form with your tax records, so you can accurately report the interest on your 2021 tax return. You can also access records of IRS payments to you by creating an online account through the IRS website.
A tax professional can help you determine whether any payments you received from the IRS are taxable, and how to properly report all of your interest income. Electronically filing an accurate return is the best way to ensure that you receive your 2021 tax refund as quickly as possible.