What interest will I pay if I use a payment plan to pay my taxes due?

[musicmantxw]

I owe 958 federally and am owed 215 by the state - what penalties and interest rates will I pay if I pay the amount due with a payment plan?

[Mike9241]

penalty 1/2% a month until paid (file timely because filing late and owing is another 4.5% per month for up to 5 months.

interest rates will vary.

The IRS interest rate is determined by the federal short-term rate plus 3%. Since the current federal short-term annual interest rate is 4.71%, the interest rate charged on late tax payments was 7.71% as of March 2024.

[Opus 17]

As long as you file on time, and pay as much as you can when you file, the interest and penalties on the unpaid balance is a penalty of 0.5% per month, plus interest currently at 7.7% APR (roughly 0.6% per month).  If you don't file on time, the penalty jumps to 5% per month.

If you can pay in full in less than 6 months, you can request a short term payment plan for free, but the only benefit is you don't get a bill, the interest and penalties still accrue at the normal rate.

If it will take longer than 6 months to pay, there is a non-refundable application fee for a long-term payment plan, and the interest and penalties are reduced by about half.