Optima Tax Relief AnnouncesIRSInterest Rate Increases for Q1 in 2023
7Newswire
24 Dec 2022, 11:40 GMT+10
The IRS recently announced that their interest rates will increase in the first quarter of 2023. The rates are determined on a quarterly basis. Optima Tax Relief provides details on the new rates beginning January 1, 2023.
The rate for overpayments and underpayments will increase from 6% to 7% per year, compounded daily. Taxpayers receive an overpayment credit when their tax payments exceed what they owe. If a taxpayer owes taxes but does not pay the balance in full, the remaining balance will be charged underpayment interest.
The rate for overpayments is 6% for corporations. If the corporate overpayment exceeds $10,000, the portion that exceeds $10,000 will receive interest at a rate of 4.5%. However, if a corporation underpays their taxes, they will be charged interest on the balance due at a rate of 9%.
Taxpayers who are still owed a tax refund for 2022 may take special interest in the rate increase. Now, if a taxpayer is still missing their tax refund, they will receive 7% interest from the IRS, beginning in January 2023. The IRS adds interest to a tax refund if it takes more than 45 days after the filing deadline to process a return and refund. There were still over 3 million unprocessed individual 2022 tax returns as of November 18, 2022. This does not include unprocessed returns from the previous tax years. While all of this sounds positive, taxpayers should expect to pay taxes on the interest.
On the other hand, if a taxpayer owes a balance, their debt will become more expensive beginning in the new year. This makes it a more critical time for taxpayers to ensure that their tax balances are paid in full and on time. Now more than ever, negligence can be very costly to taxpayers with interest rate increases accompanied by the regular penalties for underpayment.
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