Hello there taxpayers
Good news and bad news – The Internal Revenue Service today announced that interest rates will increase for the calendar quarter beginning July 1, 2022. The rates will be:
- 5% for overpayments (4% in the case of a corporation).
- 2.5% for the portion of a corporate overpayment exceeding $10,000.
- 5% for underpayments.
- 7% for large corporate underpayments.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.
The BAD news – if you owe the IRS money, your interest rate on that balance due just went UP to 5%. More reason to focus on getting that debt paid down as soon as possible! The 5% however is still much much cheaper than many credit cards so I do prefer owing the IRS money than VISA or Mastercard or others.
The GOOD news – if you have overpaid the IRS and are awaiting a refund or rolled your overpayment to 2022 taxes, the IRS will pay you 5% interest. This is a much better rate than your local bank is offering right now! I never like to overpay the IRS as I always feel as though I can deploy my cash in smarter ways like investing in the growth of my business or just the piece of mind of having cash I can quickly and easily access. I do however meet clients who like to use the IRS as a forced savings and leave their monies there. This interest rate is pretty good for those people who need the discipline of not spending away their tax money.
So in the face of rising interest rates, I highly recommend you check in with your bank and credit union and see what interest rates they are offering on Savings and Money Market accounts. Can you get a better rate on your savings? Also, a great time to check in with your credit card company and see if they can offer you a rate reduction. Credit card companies are always changing up their offerings, it is well worth the time on the phone to make sure that you have the most advantageous opportunities for your money.
Don’t forget that our Business Travel Tax Deduction Workshop is THIS Thursday, May 26th at noon EST. Wendy is going to show you how to FIND TAX DEDUCTIONS in your summer travel plans. Sign up at http://wendybarlin.com/travel