If you are required to pay quarterly estimated income tax, an upcoming change in interest rates being imposed by the IRS may directly impact you. Effective April 1st, 2022, corporations and self-employed filers who submit quarterly estimated taxes will see a hike in the interest rates that the agency charges for both overpayments and underpayments.
The new rates will be:
4% for underpayments
6% for large corporate underpayments
4% for overpayments (3% in the case of a corporation)
1.5% for the portion of a corporate overpayment exceeding $10,000
These changes will not affect you if you calculate your liability correctly and pay on time each quarter. However, taxpayers who have an outstanding balance or are otherwise out of compliance with their tax obligation need to remember that the longer they take to address the situation, the more their deficit will grow as their liabilities accrue interest at 3%.
If you have questions about how the new rates will affect you, don't hesitate to contact us today.