ECNETNews reports that the Internal Revenue Service (IRS) has confirmed that interest rates will remain unchanged for the fourth quarter of 2024. This decision affects interest rates related to overpayments and underpayments for the calendar quarter commencing October 1, 2024.
Individual taxpayers will see the interest rate for both overpayments and underpayments set at 8% per year, compounded daily. Corporations will experience a slight variation in their respective rates.
Interest Rates for the Fourth Quarter of 2024
- 8% for overpayments (payments exceeding the amount owed), while corporations will have a reduced rate of 7%.
- 5.5% for corporate overpayments exceeding $10,000.
- 8% for underpayments (taxes owed but not fully paid).
- 10% for large corporate underpayments.
The determination of interest rates follows the guidelines of the Internal Revenue Code, which mandates quarterly assessments. For individual taxpayers, the rate for overpayments and underpayments is calculated by adding three percentage points to the federal short-term rate. Corporations also follow this formula for underpayments, with their overpayment rate set at the federal short-term rate plus two percentage points.
In certain circumstances, the rate for large corporate underpayments is elevated, set at the federal short-term rate plus five percentage points. Additionally, for corporate overpayments exceeding $10,000, the rate is calculated as the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates established today are based on the federal short-term rate determined in July 2024.
Taxpayers are encouraged to keep these rates in mind as they prepare for tax payments or refunds in the upcoming quarter. The IRS employs these rates to calculate interest owed or due in various tax scenarios, ensuring fairness in compensation for both the government and taxpayers regarding overpayments and underpayments.
