I have been on an installment agreement to pay off taxes I owed for tax year 2007. For the majority of this time I've been paying more than the minimum (currently paying nearly twice the minimum monthly payment), plus I have had several years tax refunds applied to the balance. I am now within about a month of having it paid in full, in fact at the moment the only part of the balance still due is interest charges...
My question is, does my current balance reflect any savings (if there is any?) on interest for paying off early? I feel that the balance is reflecting the interest that it would have been had I made only the minimum payments?
Hope my question makes sense... Thanks,
Interest paid should reflect that it was paid off early, as the IRS only charges interest on the unpaid balance to the date of payment. If in doubt, get a transcript from the IRS to compute it. They will provide you with the data on your return at no charge. See http://www.irs.gov/individuals/article/0,,id=110571,00.html
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