News & Updates

Taxpayers that receive income not subject to withholding, such as income from self-employment, gig work, interest, dividends, capital gains, rent or 1099 earnings, may need to make estimated tax payments throughout the year. This includes freelancers, retirees, investors, businesses and corporations.

Why it matters?

Paying on time helps taxpayers avoid falling behind on their taxes and possible underpayment penalties.

Who needs to pay estimated tax?

• Taxpayers including sole proprietors, partners and S corporation shareholders who expect to have a tax liability of at least $1,000 for the year.
• Corporations that expect to owe tax of $500 or more. See Publication 542, Corporations.
• Individuals earning income from gig work, freelance work or from sales of goods and services, even if they receive a Form 1099-K. Recipients of Form 1099-K, Payment Card and Third Party Network Transactions PDF must use it with other tax records to report income.

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For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. Here is a complete list of the interest rates:

• 7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
• 4.5% for the portion of a corporate overpayment exceeding $10,000.
• 7% for underpayments (taxes owed but not fully paid).
• 9% for large corporate underpayments.

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

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five 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 one-half (0.5) of a percentage point.

These interest rates are computed from the federal short-term rate determined during April 2025.

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Earlier this year, the IRS issued its annual Dirty Dozen list that highlights some persuasive schemes impacting businesses, including new client scams, spear phishing, fake charities, bad social media advice and false credit claims.

There are several protective measures taxpayers and businesses can take, such as watching out for fake requests for W-2s especially with the tax filing deadline already passed. Businesses are encouraged to take proactive steps today to safeguard their business and employees by implementing robust security measures. Some examples are using anti-malware/anti-virus software with automatic updates and enforcing strong passwords with multi-factor authentication. Ensure that you only enter personal data on secure websites (https) to prevent unauthorized access. See Publication 5961, Protect your business from tax scams PDF, for more information.

Business owners should prioritize the protection of their Employer Identification Number (EIN). Keep it secure and up to date with accurate information. Any necessary updates to an EIN should be made promptly by using Form 8822-B. This will ensure its integrity and minimize the risk of identity theft or fraudulent activity.

Disaster season is also upon us, which opens the door for additional fraud and scams to take place after a disaster occurs. Scammers may impersonate IRS workers, claiming they can offer “help” when filing casualty loss claims. Disaster survivors can call the IRS disaster assistance line at 866-562-5227. IRS representatives will answer questions about tax relief or disaster-related tax issues.

Be sure to educate employees on data security to protect both them and your business. There are a number of resources available, such as IRS Identity Theft Central and security awareness publications, to provide comprehensive training and awareness.

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With tax season over and peak periods for disasters approaching, now is a good time for taxpayers to think about protecting important tax and financial information as part of a disaster emergency plan.

Disasters can have an immediate and lasting impact on individuals, organizations and businesses. Year-round preparation is important, and observing Hurricane Preparedness Week and Wildfire Awareness Month provides an opportunity for an annual assessment of readiness.

So far in 2025, the Federal Emergency Management Agency (FEMA) has issued 12 major disaster declarations in nine states impacted by winter storms, flooding, tornadoes, wildfires, landslides and mudslides. For current disaster declarations and information on how declarations are made, see FEMA’s Current Disasters page.

The IRS offers tips to help taxpayers protect personal financial and tax information when disaster hits.

Protect and make copies of important documents

Original documents such as tax returns, Social Security cards, marriage certificates, birth certificates and land ownership documents need to be secured in a waterproof container in a safe space. Taxpayers are also encouraged to make copies of these important documents and store them in a secondary location such as a safe deposit box or with a trusted person who lives in a different area. In addition, scanned documents can be stored on a flash drive for easy portability.

Keep a record of valuables

Taxpayers should use cell phones or other mobile devices to make a record of high-value items. A simple list with current photos or videos can help support claims for insurance or tax benefits after a disaster. The IRS disaster loss workbooks in Publication 584, Casualty, Disaster and Theft Loss Workbook (Personal-Use Property), and Publication 584-B, Business Casualty, Disaster and Theft Loss Workbook, can help individuals and businesses make lists of belongings or business equipment.

Rebuilding records

Reconstructing or replacing records after a disaster may be required for tax purposes, claiming federal assistance or insurance reimbursement. Accurate loss estimates could mean more loan and grant money may be available. Taxpayers who have lost some or all their records during a disaster should visit IRS’s Reconstructing records webpage as a first step.

Employers should check fiduciary bonds

Disasters can impact a business’ ability to make timely federal tax deposits. Employers using payroll service providers should check if the provider has a fiduciary bond in place that can protect the employer in the event of default by the payroll service provider. The IRS reminds employers to choose their payroll service providers carefully.

IRS can provide tax relief after a disaster

After FEMA issues a major disaster or emergency measures declaration, the IRS may postpone certain tax filing and payment deadlines for taxpayers who reside or have a business in certain counties affected by the disaster. The IRS provides details on states and counties that have been issued relief on the IRS Disaster relief page.

Taxpayers in the affected areas do not need to call to request this relief. The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. Those impacted by a disaster can contact the IRS Disaster Hotline at 866-562-5227 to ask their tax-related questions of an IRS specialist trained to handle disaster-related issues.

Taxpayers who do not reside or have a business in a covered disaster area but suffered impact from a disaster should call 866-562-5227 to find out if they qualify for disaster tax relief and to discuss other available options.

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Free electronic filing options

Taxpayers with an adjusted gross income of $84,000 or less in 2024 can use IRS Free File guided tax software now through Oct 15. IRS Free File Fillable forms, a part of this program, is available at no cost to taxpayers of any income level and provides electronic forms for people to fill out and e-file themselves.

IRS Direct File is now open to all eligible taxpayers in 25 states to file their 2024 federal tax returns online, for free, directly with the IRS. Go to the Direct File website for more information about Direct File eligibility and the 25 participating states.

Through a network of community partnerships, the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free tax return preparation to eligible people in the community by IRS-certified volunteers.

MilTax, a Department of Defense program, generally offers free return preparation and electronic filing software for federal income tax returns and up to three state income tax returns for all military members, and some veterans, with no income limit.

Use Where's My Refund? to check refund status

The Where's My Refund? tool usually shows a refund status within 24 hours after a taxpayer e-files a current year return. It takes about four weeks for the same information to be available for those filing paper returns.

Taxpayers can get their refund information for the current year and past two years. The tool is available 24/7, and is a fast, easy way to get information about a refund without needing to call the IRS. To use the tool, taxpayers need their Social Security number, filing status and exact refund amount. The tool updates once a day, so people don't need to check more often.

Taxpayers can also check Where's My Refund? by downloading the IRS free mobile app, IRS2Go, from an iPhone or Android device.

Taxpayers that owe on their tax return

IRS reminds people they can avoid paying interest and some penalties by filing their tax return and, if they have a balance due, paying the total amount due by the tax deadline of April 15.

Payment options for individuals

The IRS offers various options for taxpayers who are making tax payments:

• Direct Pay – Make a payment directly from a checking or savings account without any fees or registration.
• IRS Individual Online Account – Make a payment directly from a checking or savings account and view amount due, payment plan details, payment history and scheduled payments. To create an account or for more information, taxpayers can visit the online account page on IRS.gov.
• Pay taxes with debit card, credit card or digital wallet – Make a payment directly with a debit card, credit card or digital wallet. Fees are paid to the payment processors. The IRS doesn’t receive any fees for these payments. Authorized card processors and phone numbers are available on IRS.gov.
• Electronic Federal Tax Payment System (EFTPS) – This free service gives taxpayers a safe, convenient way to pay individual and business taxes by phone or online. To enroll and for more information, taxpayers can visit eftps.gov or call 800-555-4477.
• Electronic funds withdrawal (EFW) – Taxpayers can file and pay electronically from their bank account when using tax preparation software or a tax professional. This option is free and only available when electronically filing a tax return.
• Check or money order – Payments made by check or money order should be made payable to the “United States Treasury.”
• Cash – Make a cash payment through a retail partner and other methods. The IRS urges taxpayers choosing this option to start early because it involves a four-step process. Details, including answers to frequently asked questions, are on the IRS.gov page on how to pay with cash at a retail partner.

Payment options for individuals unable to pay their taxes in full

Taxpayers who can’t pay in full by the tax deadline should pay what they can now and apply for an online payment plan. Applicants that apply online will know immediately if their request for a payment plan is accepted or denied without calling or writing to the IRS.

Online payment plan options include:

• Short-term payment plan – The total balance owed is less than $100,000 in combined tax, penalties and interest. Additional time of up to 180 days to pay the balance in full.
• Long-term payment plan – New Simple Payment Plan criteria make it easier and more accessible to enter a long-term payment plan when the total balance owed is less than $50,000 in combined tax, penalties and interest. Taxpayers may pay in monthly payments for up to the collection statute, usually 10 years. Payments may be set up using direct debit (automatic bank withdrawal), which eliminates the need to send in a payment each month, saves postage costs and reduces the chance of default.

Though interest and late-payment penalties continue to accrue on any unpaid taxes after April 15, the failure to pay penalty is cut in half while an installment agreement is in effect. Find more information about the costs of payment plans on the IRS Additional information on payment plans webpage.

Unable to file by the April 15 deadline?

Individuals unable to file their tax return by the tax deadline can apply for a tax-filing extension in the following ways:

• Individual tax filers, regardless of income, can electronically request an automatic tax-filing extension through IRS Free File by filing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
• Make an electronic payment using Direct Pay, debit card, credit card or digital wallet and indicate the payment is for an extension.
• Mail Form 4868 by the tax deadline.

Getting an extension

Things taxpayers should know when requesting a tax-filing extension, including:

• Tax-filing extension requests are due by the tax deadline date, and it does not give an extension of time to pay the taxes.
• Avoid some penalties by estimating and paying the tax due by the tax deadline.
• Special rules for tax deadlines and automatic tax-filing extensions may apply for taxpayers serving in a combat zone or qualified hazardous duty areas, living outside the United States, and people living in certain disaster areas. They may not need to submit a tax-filing extension; however, people should check to see if they qualify before the tax deadline.

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