The Internal Revenue Service has notified the Applicable Federal Rates (AFRs) (read interest rate) for December 2022. The new interest rate, or AFR, is announced in accordance with Section 1274(d) of the Internal Revenue Code.
Interest rates AFR table for December 2022
How does the AFR interest rate affect you?
The applicable federal rate (AFR) is the minimum interest rate that the Internal Revenue Service (IRS) allows for private loans. IRS takes these AFR interest rate as a benchmark interest for loans.If the interest on a loan is lower than the applicable AFR, it may result in a taxable event for the parties involved. The AFR also affects the estate taxes as per section 7520, for which the interest rate for December 2022 is 5.20 percent.
For example, if you give a loan to a person below the IRS-notified AFR, the interest not charged shall be deemed as interest money gifted to the loanee.IRS will charge the sum of interest not charged as taxable gift.
You can get the full revenue ruling for December 2022 here.
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