IRS announces Q1 interest rates

The IRS has announced interest rates will remain the same for the calendar quarter beginning Jan. 1, 2015. The rates will be:

• 3% for over-payments (2% in the case of a corporation);
• 3% percent for underpayments;

Read: IRS head foresees frustrating tax season

• 5% for large corporate underpayments; and
• 0.5% for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus 0.5 of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during October 2014 to take effect Nov. 1, 2014, based on daily compounding.

Also read:

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Possible U.S. tax changes for snowbirds

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.