Interest rate on Installment agreement request

[arlo]

Where can I find out what a taxpayer can expect to pay on his installment agreement for his taxes due.

[Anarchrist]

https://www.irs.gov/newsroom/interest-rates-increase-for-the-first-quarter-of-2019

[JohnH]

There's an interest charge which varies, plus a failure-to-pay penalty. The sum of the two currently runs about 1% per month, but that can increase if the interest rate component increases. There's also a fee required to set up the payment agreement - the fee varies based on how it's set up (paper, online, etc) and whether they choose a bank draft.

All in all, the current total works out to the equivalent of paying a 12% APR on the unpaid balance. Not the best interest rate, but also not bad for an unsecured loan that doesn't affect one's credit rating and can be set up without any significant effort. Certainly a bargain when compared to borrowing from a credit card in most cases, which unfortunately I see lots of tax preparers advise. The only time using a credit card is advisable is if the credit card is offering a bargain rate, and even then it's often a bad option.