An Individual's Income Tax Refund and Interest Calculation

An individual carries on a business as a sole proprietor

An individual operates a business as a sole proprietorship.

The individual's 2022 income tax return and refund

The individual files his income tax return for the year 2022 on June 2, 2023. The return indicates that he is entitled to a refund of $7,200.

Interest calculation on the refund

Assuming that the individual receives the full refund on July 12, 2023, interest will be included for what period of time?

a) June 2023 to July 12, 2023

b) July 2, 2023 to July 12, 2023

c) April 30, 2023 to July 12, 2023

d) No interest will be received

Final answer:

The interest on an income tax refund is generally computed from the filing date to the date the refund was received. In this case, the interest will be included for the period from June 2, 2023 to July 12, 2023.

Explanation:

Consider the various periods mentioned in your question. The period from June 2023 to July 12, 2023, July 2, 2023 to July 12, 2023, and April 30, 2023, to July 12, 2023. However, in the context of income tax returns, the generating of interest for an income tax refund generally begins from the latest of three dates: the due date of the return without extensions, the date the return was filed, or the date the tax was paid. Since the individual filed his 2022 income tax return on June 2, 2023, and received the refund on July 12, 2023, the interest would be computed for the period from the filing date to the date the refund was received. So, the correct answer to your question is that interest will be included for the period from June 2, 2023 to July 12, 2023.