IRS Interest Rates for 2024: 8% on Unpaid Taxes and Refund Delays
According to The Street, the IRS charges interest on unpaid taxes starting from the due date until the balance is fully paid. This interest, which is compounded daily, is set at 8% for individuals for the first three quarters of 2024, reflecting current high rates. If you don’t pay your taxes or penalties promptly, the accumulating interest can quickly increase the total amount owed. Payments are first applied to taxes owed, then to penalties, and finally to interest, with interest also accruing on unpaid penalties.
If you’re due a tax refund, the IRS must pay you interest if the refund is delayed beyond 45 days from the filing deadline. Interest on refunds starts accruing from the tax filing deadline or the date the return is filed, whichever is later. If the IRS fails to issue a refund within this period, they will calculate and pay interest on the overpaid amount.
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8% Interest Rate: How the IRS Charges Daily Compounding Interest on Unpaid Taxes – Know the Rules and Avoid Surprising Fees (PHOTO: Los Angeles Times)
IRS Adjusts Interest Rates: Corporations with Large Tax Debts Face Higher Rates
If a corporation owes more than $100,000 in taxes, the IRS tacks on an extra 2% to the usual interest rate. The IRS updates these rates every three months, adjusting them based on the current short-term federal rate plus a 3% add-on. This ensures the interest reflects the latest economic conditions, keeping things fair and up-to-date.
READ ALSO: $15,057,684 in Unclaimed Refunds Await Louisiana Taxpayers: Claim Yours by September 6, 2024!
