It 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.

There 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

You pay tax on those overpayments.

But they only pay that if they don’t return it that year (for normal W-2 employees).

Yes, I got a 1099-INT from the IRS.

In some cases (depending on your tax situation) other forms of bonds (municipal/state) may be better because of how or if they get taxed.

I 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.