Beware of high interest rates on underpayments during 2023

The IRS’ most recently published interest rates on overpayments and underpayments were last updated in October 2023. For individuals, the rate for overpayments and underpayments will be 8% per year, compounded daily.   This rate is up 2% from 2022, and 6% from 2021.  Here is a complete list of the new rates:

• 8% for overpayments (payments made in excess of the amount owed), 7% for corporations.
• 5.5% for the portion of a corporate overpayment exceeding $10,000.
• 8% for underpayments (taxes owed but not fully paid).
• 10% for large corporate underpayments.

As rates have climbed, taxpayers with underpayments of estimated taxes have incurred substantially larger interest rate charges on federal taxes due.  As a result, it has become critically important to become more focused on early and accurate tax planning. We can help with 2023 tax planning strategies for you and your business, please contact us today and let us know what you need at info@adccpa.com