Tax Dictionary – Accrue
If an unpaid balance remains on your account, interest (and any applicable penalties) will continue to accrue until the account is full paid.
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Penalties and interest accrue (grow) over time. As long as you have a tax bill that you haven’t paid, interest and penalties will accrue on the balance.
- Interest is 4% a year, and your tax balance is $10,000. The interest for Month 1 is $33, so your unpaid balance is now $10,033.
- For Month 2, interest is calculated on $10,033, so the interest is $33.11, and the new balance is $10,066.11, and so on.
Accruals add up quickly, so it’s best to pay as much as you can, as fast as you can to reduce the penalties and interest that you will pay.
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