IRS Penalties & Interest Calculator — Tax Year 2023

Tax year 2023 is more about trajectory than total balance, because outcomes are still heavily influenced by timing. Early action can limit the buildup of penalties and interest before compounding accelerates, while delays allow monthly penalties and daily interest to grow and can cause the year to become part of a larger pattern of noncompliance. Decisions made at this stage often determine whether the balance remains manageable or becomes significantly harder to resolve later.

Interest compounds daily using IRS interest calculation rules, meaning interest may be charged on both the original unpaid tax and previously assessed penalties. Applicable interest rates change quarterly, which can affect the total interest amount over time.When penalties continue to accrue monthly and their interest compounds, balances can grow faster than expected. This is especially true when a year like 2023 remains unresolved while tax refunds or corporate refunds are offset against outstanding balances.

An estimate from this IRS Penalties and Interest Calculator can help clarify how penalties and interest may already be affecting your 2023 balance, even if no enforcement is currently underway. After reviewing the estimate, taxpayers often compare it to IRS transcripts or notices, assess whether penalty relief or abatement may apply, evaluate payment options to limit further accrual, and address the year proactively before it becomes part of a larger unresolved pattern. In some cases, penalty abatement requests, including first-time penalty abatement, may be submitted using Form 843 and may require supporting financial information.