Apply portion of refund to next year - EFFECTIVE DATE?

Forum|Forum|2 years ago
October 4, 2023
3 replies
22 views

Hi,

I am tardy with making estimated payments on time, but ended up overpaying for the 2022 tax year overall. I made my estimated tax payments on Sep 2022, Jan 2023, and June 2023.

I want the IRS to apply a portion of my 2022 tax refund to the 2023 tax year. However, I want to make sure they apply the earlier tax payments (e.g. Sep 2022, Jan 2023) to the 2023 tax year, as these have an earlier effective date to help minimize interest.

What would be the best way to make sure they apply the earlier tax payments to 2023, but refund me the latest tax payment?

Thank you!

Thanks for your help

NCperson

Level 15

@imi138 I don't beleive it works that way. The IRS does not pay interest on the money you give them which in effect is what I think you are asking for.

They assume that your tax liability is the same each quarter (unless you complete form 2210) and then they will credit the payments on the date received to determine if there are late payment penalties, but they do not pay interest if you overpaid.

If you overpaid your taxes and want the refund credited to 2023, they will credit the June 2023 payment first and I would imagine give you credit as of that date for the 2023 tax year (it was late for 2023 tax year as well).

imi138Author

Level 2

@NCperson Thanks for your quick reply!

To clarify, I am not expecting IRS to pay me interest. Rather, I would like them to apply the earlier payments to my 2023 account so that they will charge me LESS interest for being late in 2023.

Is there any way to request the earlier payments to be credited to 2023 first to achieve this?

Thanks for your help!

VolvoGirl

Level 15

So you already expect to be paying your 2023 tax due late after April 18, 2024? What you are saying doesn't quite make sense.

VolvoGirl

Level 15

Not sure how you could have made 2022 estimated payments in 2023. Well the 4th qtr was due Jan 15. Sorry you can't apply certain payments like that. The amount applied to 2023 will go towards the first quarter payment .

If you end up with a 2022 penalty......

You might be able to eliminate it or at least reduce it. You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you. It's form 2210.

It's under

Federal or Personal (for Home & Business Desktop)

Other Tax Situations

Additional Tax Payments

Underpayment Penalties - Click the Start or update button

Mike9241

Level 15

that's not how it works, and you have no choice.

based on prior IRS announcements (not for 2022 specifically) any overpayment existing from applying the Sept and Jan payments to your tax liability is applied to 4/15/2023. The June payment is applied to any remaining tax liability and the excess is credited as a payment of the 2023 taxes on the date the payment was received. Different rules may apply for certain Californians. If the IRS charges you penalties, you should get a notice. most likely the amount you asked to be applied to 2023 will be reduced for these penalties

Mike9241