[quote=Escoguy][quote=Coronita]Well, this was an unexpected result.
I made a mistake on my 2019 federal taxes and had to file a 1040x amended return to get back money that I accidentally overpaid. (Basically, I accidentally double counted the capital gains on a custodial account for my kid on both her individual taxes and my own taxes, because of a minor oversight of the TurboTax/Brokerage import tool that imported it into both tax filings)….
Anyway, the IRS returned me the overpaid taxes in 2019…plus interest…And the interest was much more than how much I would have earned leaving the amount in a 2-3 year CD…. So I was curious exactly how much interest is paid for overpaid taxes, and I found this from the IRS…
[quote]
June 24, 2020
Interest on individual 2019 refunds reflected on returns filed by July 15, 2020 will generally be paid from April 15, 2020 until the date of the refund. Interest payments may be received separately from the refund. By law, the interest rate on both overpayment and underpayment of tax is adjusted quarterly. The interest rate for the second quarter, ending on June 30, 2020, is 5% per year, compounded daily. The interest rate for the third quarter, ending September 30, 2020, is 3% per year, compounded daily.
[/quote]
So, yes overpaying your taxes and then asking for a refund does in fact give you better returns than leaving the same money in your 1.5%-2% CD, lol.[/quote]
A highly compensation person I worked with 500K+ was late on his taxes and quite stressed until he learned his interest rate was only like 1% (back in 2019).
I’m assuming the IRS will now raise the rate it charges too, and not only the rate it pays.
So suddenly, anyone on a multi-year tax repayment plan may have to check if they are impacted.[/quote]
Yes, because actually my 2020 taxes, I didn’t make estimated tax payments correctly (I never do) and owed like $115 in penalties. I think the interest rate for the penalty was like 4% or something like that…They sent me a statement, but actually the penalty was lower than I calculated with turbo tax, and since I overpaid my taxes in my extension, they still owe me money.
I got off easy with the $115 in penalties only. My estimated taxes were just an gussimate and forgot a few places of capital gains. Fortunately, I did a lot of remodeling and on paper my rental income was $0 with a carry over loss…
If only the IRS would cut me the fcking refund check they said they would back in July, which was suppose to be only 4-6 weeks. I guess they will owe me interest for taking until now….
