Overpayment of estimated taxes

Forum|Forum|5 years ago
February 28, 2021
1 reply
11 views

I overpaid my estimated taxes for 2020. I didn't reduce my payments after the RMD requirement was suspended. Is the resulting refund taxable the following year?

Not A Product Question

ErnieS0

Level 15

Federal refunds are not taxable. State refunds may be taxable if you itemize deductions and choose to deduct state and local income taxes instead of sales taxes.

If you overpaid tax, you have the option of applying some of your 2020 overpayment towards your 2021 estimated taxes.

Related Resource

How do I apply my refund to next year's (2021) taxes?

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ziamia914Author

Level 2

I have received both my federal and state 2020 refunds. Glad to hear my 2020 federal refund is not taxable in 2021, but I am not sure I understand about the state refund. I overpaid my 2020 state estimated taxes too. My state has no sales tax and TT itemized both my federal and state returns. Where do I stand on whether my state refund will be taxable next year? Frankly, I don't understand why if I overpaid taxes, and each entity had my money in their 'bank', why should I be taxed on it when they gave my money back to me!