Interest rates

IRS to Raise Interest Rates in April: What You Need to Know

Interest rates will increase for the calendar quarter beginning April 1, the IRS said, an increase that could have significant consequences for late filers.

The IRS sets a new interest rate each quarter under the Internal Revenue Code.

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Effective Friday, April 1, the rate will increase to 4% for overpayments and 3% for corporations, 1.5% for the portion of a corporate payment exceeding $10,000, 4% for under- paid and 6% for underpaid companies.

IRS headquarters in Washington, DC on February 25, 2022. (Al Drago/Bloomberg via Getty Images/Getty Images)

For non-corporate taxpayers, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Americans owe interest on any unpaid tax from the due date of the return until the date of payment. Interest is compounded daily.

Individuals also accrue interest on late filing penalties.

If you file your taxes on time but don’t pay the full amount you owe, you’ll likely have to pay a late payment penalty, which is usually 0.5% of the tax you owe per month or part of a month until that the tax is paid. in its entirety.

Tax filing season began on January 24 this year and will end on April 18 instead of the usual April 15 deadline, as that is when Emancipation Day will be observed in Washington, DC.

Charles Retig

Charles P. Rettig, Commissioner of the IRS, testifies during a Senate Finance Committee hearing on the IRS budget request on Capitol Hill in Washington, DC on June 8, 2021. (Tom Williams/Pool/AFP via Getty Images/Getty Images)

Experts have urged taxpayers to file their tax returns as soon as possible, noting that individuals do not need previous returns to submit their 2021 returns. Americans are encouraged to file electronically with direct deposit in order to avoid potential delays and receive returns within 21 days.

You can start tracking the status of your tax refund within 24 hours of filing using the IRS where is my refund tool.

IRS

This April 13, 2014 file photo shows the IRS headquarters building in Washington. (AP Photo/J. David Ake, File/AP Newsroom)

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Taxpayers can request an extension online by completing Form 4868 using the IRS”Free fileThey must submit the form by April 18 or print the form and mail it to their state’s IRS address, making sure it is postmarked by April 18.

The tax collection agency said last week it had issued more than 45 million refunds worth a collective $152 billion as of March 11. Deadline April 18.