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It is not interest free. E.g., I was paid $480 in interest on overpayments last year.
by loeg 3y ago
It is not interest free. E.g., I was paid $480 in interest on overpayments last year.
- dmoy 3y agoIt is interest free if the IRS pays you within N days of you filing. If they're slower, then they pay interest. Where N is some value between like .... 30 and 90? I forget.
- loeg 3y agoThere are a number of different overpayment interest regimes[1]. Mine was paid based on time elapsed from the time of overpayment (overpaid quarterly estimated taxes). [1]: https://www.irs.gov/payments/interest#pay https://www.irs.gov/payments/interest#pay
- bombcar 3y agoYou pay tax on those overpayments. But they only pay that if they don’t return it that year (for normal W-2 employees).
- loeg 3y agoYes, I got a 1099-INT from the IRS.
- bombcar 3y agoIn some cases (depending on your tax situation) other forms of bonds (municipal/state) may be better because of how or if they get taxed.
- loeg 3y agoI did not deliberately overpay as an investment strategy :-). Last time I looked, you needed to be in a higher tax bracket than I was to make Muni bonds worth it, in part because my state (WA) does not have income tax. Something like the 35% bracket. And anyway, my investment strategy is not long bonds at this point in my life.