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How do I calculate interest?

Answer #111 -- ( Published 08/05/2005 10:49 AM | Updated 07/12/2017 10:40 AM )

How do I calculate interest?

Interest is calculated on any unpaid tax from the day after the original due date of your return through the date you pay the tax and penalties. Interest is simple interest figured using a daily rate. The rate is reviewed twice each year - on January 1 and July 1 - and adjusted according to the "underpayment rate" or the "short-term federal rate" established under the Internal Revenue Code (IRC) Section 6621. For interest accruing on or after January 1, 2004, the rate of interest payable on overpayments and underpayments is the "short-term federal rate" for the first year that the overpayment or underpayment accrues interest. This rate is 3 percent less than the "underpayment rate." After one year, interest will accrue on any remaining balance at the "underpayment rate." For interest accruing on or after January 1, 1994, and before January 1, 2004, the rate is the "federal underpayment rate." See Publication 103, Penalties and Interest for Illinois Taxes, for more information. You may view a list of the current interest rates on our website.

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