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

IRS Notice CP22H – Adjustment to Your Shared Responsibility Payment

The IRS adjusted your Shared Responsibility Payment and you owe taxes. Learn about notice CP22H and how to address it with help from the experts at H&R Block.

Why Is My Tax Refund Delayed?

"Where's my refund?" Find out why you may have a missing or delayed refund with the tax professionals at H&R Block.

IRS Letter 4550C – Additional Information Requested

Learn more about letter 4550C and how to handle an IRS request for additional information with help from the tax experts at H&R Block.

2019 Tax Reform Calculator

Due to tax law changes, we know it can be difficult to estimate your refund or balance due. H&R Block experts outline how the changes are reflected in our tax reform calculator.