It reduces your quarterly estimated payments.  It is applied starting with estimated payment 1.  If you have any left over or excess overpayment after payment 1, it gets applied to estimated payment 2.  Turbo tax will print your estimated payment vouchers with these computations already done.

I don't see how i can do this using the system...

Actually by applying your refund to next year it is taken into consideration when you prepare the quarterly estimated payments.  Then when you fill,out next year's return the refund applied shows on on the same line with any estimated payments on 1040 line 65.

To apply your federal refund to next year, enter it under
Federal Taxes Tab or Personal (Self Employed/H&B/Self Employed version)
Other Tax Situations
Additional Tax Payments
Apply Refund to Next Year - Click the Start or Update button

To apply your state refund to next year, enter it under
State Taxes tab
And keep continuing and stepping though the interview about a dozen or more screens and it will finally ask how much you want to apply.  It is probably one of the last questions in the state section.

ah I see