IRS Applicable Federal Rates (AFRs)

May 2020 | Apr. 2020 | |
---|---|---|

Monthly | 0.58% | 0.99% |

Keeping this in view, what AFR rate should I use?

For demand loans, taxpayers

**should use**the short-term**AFR**in effect for each semi-annual period that the loan is outstanding. Imputed interest on demand loans with a fixed amount outstanding for the entire year can be calculated**using**the blended annual**rate**of 0.73% (for 2016), per Rev. Rul.Also, what is the AFR rate for 2019?

The downward trend that began in January

**2019**continues, with all AFRs and the 7520**rate**at or below 1.86% for October**2019**.What is the current 7520 rate?

For example, the rate that is

**120 percent**of the applicable federal rate (compounded annually) for January 2018 is 2.62 percent. That rate is then rounded to the nearest two-tenths of one percent or 2.6 percent for purposes of IRC 7520.How is interest on a family loan calculated?

Convert the annual rate to a monthly rate by dividing by 12 (6% annually divided by 12 months results in a 0.5% monthly rate).

**Figure**the monthly**interest**by multiplying the monthly rate by the**loan**balance at the start of the month ($100,000 multiplied by 0.5% equals $500 for the first month).