1) Could be that they are keeping for a tax they know you owe, or have already assessed, for some other tax year.
As stated by the IRS:
....."We hold income tax refunds in cases where our records show that one or more income tax returns are past due. We hold them until we get the past due return or receive an acceptable reason for not filing a past due return."
OR...
Also, depends on what tax year you are filing.....that overpayment represents a "refund"....and you can only file 3-years back to regain a refund...
2) For example, for a 2013 tax return, It's due date was ~15 Apr 2014, + 3 years = ~15 April 2017 (I use"~" because i'm not looking up the exact date.+ or - a couple days)
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Beyond that, for filing prior-year tax returns, I never recommend attempting to apply the refund to the next year. Simply because of the issue you have just noted..and also because you may make a mistake on one year, that the IRS corrects, and the error just gets propagated to the next year. So treat each year you are back-filing as a completely separate form-set.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
