2019 Tax Refunds to be Delayed by Joanie B. Stein, CPA
Posted on July 30, 2020
by
Joanie Stein
The COVID-19 pandemic that precipitated a three-month delay of the 2019 federal income tax filing deadline is also requiring taxpayers to wait longer than usual to receive any refunds to which they may be entitled.
It is not unusual for taxpayers to view refunds as welcome surprises they can use to free-up cash flow, pay down expenses or fund high-ticket purchases. In truth, they represent the federal government’s interest-free repayment of excess taxes individuals paid into the system throughout the year. While the IRS claims it ordinarily issues 90 percent of refunds in less than 21 days following a taxpayer’s filing of a federal income tax return, most would agree that 2020 is not a typical year, and the IRS is not immune from the coronavirus-related disruptions to normal business operations and individuals’ personal lives. Despite the postponement of last year’s federal income tax filing deadline from April 15 to July 15, millions of taxpayers have already filed their 2019 returns, creating a backlog of both paper and electronic tax returns for the IRS to process with limited staff.
If you filed your individual income tax return for 2019 by the July 15, 2020, deadline and you are expecting a refund, there is some good news. The IRS will pay interest on federal tax refunds issued after April 15, 2020, at a rate that is higher than those paid by most banks. The rate is 5 percent compounded daily for the second quarter ending June 30, 2020, and 3 percent for the third quarter ending September 30, 2020.
According to the IRS, delays processing refunds will take longer for those taxpayers who filed paper returns and did not elect to have those payments deposited electronically into their bank accounts. If you filed electronically, you may track your refund on the IRS website’s Where’s My Refund tool.
While many taxpayers will appreciate the extra cash of a refund during this time, it may be beneficial to make some adjustments to your withholding so that you take home more of your paycheck during the year rather than giving it to the government in the form of an interest-free loan. The advisors and accountants with Berkowitz Pollack Brant can help you determine if your employer is withholding enough from your pay or if you should be making estimated quarterly tax payments to avoid a tax bill next year.
About the Author: Joanie B. Stein, CPA, is a senior manager in the Tax Services practice of Berkowitz Pollack Brant Advisors + CPAs, where she works with individuals and closely held businesses to implement sound strategies that are intended to preserve wealth and improve tax-efficiency. She can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com.
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