The Internal Revenue Service (IRS) has announced what its various interest rates will be for the first quarter of 2024, which include the rate applied for underpayment of taxes.
Under the Internal Revenue Code, the IRS is required to determine the rate of interest for overpayment and underpayment of taxes on a quarterly basis.
The IRS said in a Nov. 17 notice that, for the calendar quarter beginning on Jan. 1, 2024, the interest rates will remain the same as for the prior quarter.
Specifically, for individuals, the rate for overpayments (payments made in excess of the amount owed) and underpayments (taxes owed but not fully paid) will be 8 percent per year, compounded daily.
For corporations, the rate for overpayments will be 7 percent, dropping to 5.5 percent for the portion of a corporate overpayment exceeding $10,000.
Large corporate underpayments will carry an interest rate of 10 percent.
Generally, for taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.
For large corporate underpayments, the rate is the federal short-term rate plus five percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 is the federal short-term rate plus one-half of a percentage point.
The latest announcement carries those same rates over to the first quarter of 2024.
COVID Stimulus Cash
But while some Americans who were eligible to receive pandemic-era stimulus checks didn't apply for them, there's a way they can still claim the money.
The way to do so is through the "recovery rebate credit." This is a refundable credit that either reduces the amount of taxes owed, is included in a tax refund, or is simply paid out by the IRS to eligible taxpayers if—after claiming the credit—it turns out they overpaid on their taxes.
In order to claim the 2020 and 2021 recovery rebate credits, a taxpayer must meet several criteria.
For the 2020 credit, they must have been a citizen of the United States or a U.S. resident alien in 2020. Also, they must not have been a dependent of another taxpayer for 2020 and possess a valid Social Security number issued before the due date of the tax return that is valid for employment in the United States.
For the 2021 recovery rebate credit, eligibility criteria include being a U.S. citizen or U.S. resident alien in 2021, not being a dependent of another taxpayer for 2021, and having a Social Security number issued by the due date of the tax return.
For the 2021 recovery rebate credit, the deadline for filing (or amending) a tax return is April 15, 2025.