Applying 2023 Refund towards 2024 Taxes

[prasadbhusa]

Hi Amita R, 

Thanks so much for your comprehensive response! Would it reduce my penalty / interest for Underpayment if I apply my refund now vs. paying the next installment on Jan 15th? Thanks again!

[AR_CPA2]

Yes, Applying 2023 refund toward 2024 taxes will reduce your penalty as compared to not applying the 2023 refund to 2024 tax and instead paying that as 4th Quarter estimated tax payment due on Jan 15, 2025.  Reason for that is any 2023 refund you apply towards 2024 will be considered as paid all through the year instead of actual date IRS will receive your 4th Qtr payment. 

Hope this helps!