When does the interest on underpayments begin to accrue?

• A. From the due date until payment.
• B. From the date of assessment.
• C. Only after the payment is late by 30 days.
• D. From the end of the tax year.

Answer: (A)

Interest on underpayments starts when the money is due and continues on any unpaid balance until it’s paid. The government charges this interest to compensate for the time the tax remains unpaid, so it accrues from the due date of the return (the payment deadline) even if you pay later. It isn’t triggered only after a 30-day delay, nor is it tied to the date of assessment or to the end of the tax year. For example, if the due date is April 15 and you pay on May 1, interest accrues from April 15 through May 1.