Should I file taxes if I know I will owe?

Interest on tax debt is generally calculated based on the amount of taxes owed and the amount of time that has passed since the taxes were due. The interest rate is set by the IRS and can change quarterly. The interest rate is typically the federal short-term rate plus 3%, compounded daily. If you have unpaid taxes, it's important to pay them off as soon as possible to avoid accruing more interest.