Want to Apply Your Tax Refund to Next Year’s Estimated Tax? It’s Possible

 

Expecting a refund and want to get ahead on your future taxes? While most taxpayers receive their refund in cash, you’re not required to go this route.  Instead, you can apply your tax refund to next year’s estimated taxes.

If you do choose to apply your refund to next year’s taxes, the refund amount will apply to the first estimated payment until all of the refund has been used.  Using your tax refund this way might help you reduce the burden of setting aside money to pay your estimated taxes.

Not sure you want to use all of this year’s refund for your estimated taxes?  You can always choose to partially apply your refund to next year.

How Do I Know If I Applied Part of 2020’s Refund to My 2021 Taxes?

Not sure if you applied last year’s tax refund to this year’s taxes? We can help. Use the instructions below to find out if you applied your refund to the next year (this year) and how you should report the amount when you do your current taxes.

Look at your 2020 federal return to see:

  • If you had an overpayment (refund) that was applied to this year’s estimated payments
  • How much, if any, that amount was

Report the amount on your 2021 Form 1040, Schedule 5, line 66. Don’t include in the amount:

  • Any overpayment you received as a refund
  • Any balance due from last year’s return that you paid in 2021

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