Hi! I owe $ to IRS as I underpaid taxes (form 1040) and would like to use refund from current year tax return towards that. How can I do this?

[mwasilewko]

So basically I entered that I prepaid i.e. $10k in estimated tax payments, but it turned out that I was wrong and transferred only $7k so I have to pay them back $2k + penaltis (I know exact $ value to pay). This year I get e refund for taxes. Should I claim refund and then pay them back via IRS website or is there some way to include that penalty value in turbotax and have it automatically recalculate my tax situation and pay the remaining balance?

[MaryK4]

In TurboTax, under Estimates and Other Taxes Paid, you can make the adjustments need to correctly file your return (see below).

[fanfare]

IRS will take any tax and penalties and interest you owe from your refund.

Your refund will be smaller, or zero.

If you still owe after that, you will have to find other funds to pay your taxes.

@mwasilewko 

[VolvoGirl]

If you owe for a prior year they will automatically take it out of any refunds you get.  You don't have to do anything.