Americans who fail to keep up with their tax payments may soon feel a sting in the pocketbook, thanks to the Internal Revenue Service (IRS).
According to the Wall Street Journal, the IRS is charging eight percent interest when it comes to estimated tax underpayments, noting the move went into effect October 1.
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Two years ago it was three percent, and “the increase is one of the many effects of rising interest rates,” the Journal article continued:
These higher penalties, which can run in the hundreds or even thousands of dollars, are particularly relevant for gig workers and consultants who don’t have taxes withheld and figure they can pay their taxes come April. People who get steady paychecks with tax withholding could also be affected if they have additional income and get the math wrong.
To avoid underpayment penalties, most filers must pay 90% of their taxes through withholding during the calendar year, or through estimated payments due quarterly. The payment for the fourth quarter of 2023 comes due Jan. 16, 2024. The IRS won’t