After the COVID-19 pandemic, the US public is in for more agony. The IRS has said that citizens will be paying more from April 1 reports bestlifeonline.com. In a memo sent on February 23, the IRS has forewarned taxpayers that they can expect a price hike in the coming few months. In addition, the Tax enforcer said that interest rates would increase in the coming calendar year starting from April.
Big Changes In Interest Rates From April
One can collect interest in two types of payments-overpayments or underpayment. The overpayment will have an interest rate of 4%, barring corporations who will earn 3% and 1.5% for the overpayment which exceeds $10,000. On the other hand, underpayments will increase interest to 4% overall and 6% for large corporate payments.
The IRS explained, “Under the Internal Revenue Code, the rate of interest is determined every quarter,”
The IRS has not changed the interest rates in the last quarter from January 1, 2022. Presently the interest stands as follows-3 percent for general overpayments and 2 percent for corporation overpayments. An additional 0.5 % for the portion of corporate payment above $10,000. Underpayments have an interest of 3% at present, and large corporations are charged at a rate of 5%.
It Could Mean Citizens Will Have To Pay The IRS More Money.
If any taxpayer is facing interest on underpayment, rest assured he will have to shell out more from April 1. Underpayment interest is charged if you don’t pay your tax, penalties, and additions to tax or interest by the due date. The interest will be charged even if you apply for an extension. The deadline for filing 2021 tax returns and paying tax for most taxpayers is April 18.
On the other hand, the IRS could end up owing money to you if you have made an overpayment. The IRS will pay interest for the excess amount. It could be calculated from your tax filing return filing due date, a late-filed tax return received to date, or the date the IRS receives the return in a format it can process —whichever date occurs last.