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.
Liens and levies are tools the IRS uses to collect back taxes. Learn more about each one -- and how to avoid tax liens and levies by working with the IRS.
You might file an amended return if you’ve already filed and need to make changes. Learn how to track your amended return from the experts at H&R Block.
Let H&R Block help you determine when your tax return will be deposited into your bank account based on the IRS refund schedule.
Understand your tax responsibilities when you receive nonemployee compensation. Read the IRS definition and get more insight from the experts at H&R Block.