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.

Related Topics

Related Resources

Amending Tax Return with Form 1040x

Can you amend your tax return to add dependents if you already filled your return? Get tax answers from H&R Block.

Help Better Protect Yourself Against Tax Identity Theft

Fraudulent tax returns are an ever-growing problem. Learn how to protect yourself from tax identity theft with the experts at H&R Block.

If You’ve Fallen Victim to a Tax Scam, Use Form 14039

If someone has fraudulently filed a tax return with your SSN, use Form 14039 to fix the situation. Learn more about tax identity theft with the experts at H&R Block.

Inheritance Tax

Inheritance tax is the tax you pay as the beneficiary of property that you inherited and then you sell. Learn more from the tax experts at H&R Block.