IRS Interest Rate Increases for Q1 of 2023
Last updated 01/05/2023 byNews
The IRS has recently announced that they are increasing their interest rates for both overpayments and underpayments. This means that if you’re owed a refund from the IRS, you’ll now receive a higher interest rate on that refund. On the other hand, if you owe the IRS money, the interest rate on that unpaid balance has also gone up.
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How much did IRS interest rates increase for 2023?
Both overpayment and underpayment rates with the IRS increased from 6% to 7%. These rates are per year and are compounded daily. The rate for overpayments in the case of corporations is 6%. If the corporation’s overpayment exceeds $10,000, the excess payment will accrue interest at a rate of 4.5%. However, if a corporation underpays, it will be charged interest on the balance due at a rate of 9%.
When do the new IRS interest rates take effect?
These new IRS interest rates took effect on January 1, 2023, and are compounded daily.
How do the new IRS rates affect my refund?
If you’ve paid more in taxes than you actually owed, you’ll be getting an overpayment credit from the IRS. This is great news for those who are still waiting for their past refunds! If you’re still missing your tax refund for 2022, the IRS will now pay you interest on that refund at a rate of 7% starting January 1, 2023. This only applies if it takes the IRS more than 45 days to process your return and issue a refund. It’s worth noting that as of November 18, 2022, there were still over 3 million unprocessed individual tax returns for the 2022 tax year. If you’re not sure where your refund is, it’s always a good idea to check in with the IRS to see the status of your return.
What do the IRS interest rate increases mean if I owe the IRS?
If you’re still waiting on your 2022 tax refund, the recent rate increase is good news for you. However, if you owe the IRS money, this might not be such great news. If you haven’t paid your full tax balance, you’ll now be charged a higher rate of interest on that unpaid amount. It’s important to try and pay off your tax debt as soon as possible to avoid accruing even more interest. Neglecting your tax bill can be very costly, especially with the recent rate increase and the added penalties for underpayment. If you’re having trouble paying your tax debt, it’s always a good idea to seek help from a tax professional. They can help you come up with a plan to get back on track.
- The Internal Revenue Service (IRS) has increased its interest rates for both overpayments and underpayments from 6% to 7% per year, effective from 1 January 2023.
- The rate for overpayments by corporations is 6%, and if the overpayment exceeds $10,000, the excess will accrue interest at a rate of 4.5%. Corporations that underpay will be charged interest on the balance due at a rate of 9%.
- The new rates apply to individuals and businesses that owe the IRS money or are owed a refund.
- If a tax return for the 2022 tax year is not processed within 45 days, the IRS will pay interest on the refund at a rate of 7%.
- If you owe the IRS money and have not paid your full tax balance, you will now be charged a higher rate of interest on the unpaid amount. It is important to try and pay off your tax debt as soon as possible to avoid accruing more interest.
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