Overpayment of Taxes Applied to Next Year
Wondering what’s the advantage of applying your overpayment of taxes to next year? If you’re receiving a refund for this year’s taxes, you have the option to put this money toward your taxes for the next year.
While you’re not required to apply your overpayment of taxes to next year, doing so allows you to get a head start on next year’s taxes. This may be especially helpful if you’re going to have income that’s not subject to withholding. For example, if you earn income as an independent contractor and your taxes are not withheld through Form W-4 instructions, you may need to make quarterly estimated tax payments.
For some, it may take a little extra effort to set money aside to make those estimated tax payments. If you apply your overpayment of taxes to next year, you’ve helped yourself reduce the amount you need to set aside.
How Much IRS Overpayment Can Be Applied to Next Year?
You can choose to apply all or just some of your IRS overpayment to next year’s taxes. If you use the entire amount of your overpayment, it will apply to your first installment of estimated taxes until all your balance has been used.
In the past, joint filing could sometimes put couples into a higher tax bracket. Learn more about the disadvantages of married filing separately returns with help from H&R Block.
Can I e-file my tax return? The Tax Pros at H&R Block answer all your questions about TCJA filing changes and more on how to file your tax return online.
Do you need help determining when to file Form 1041 for an estate? Learn more from the tax pros at H&R Block.
Learn more about notice CP10, why you received it, and how to handle an IRS CP10 notice with help from the tax experts at H&R Block.