topic Applying previous year refund in Deductions & credits

Applying previous year refund

biggap — Thu, 30 Jul 2020 19:54:56 GMT

I am finalizing my parents' tax returns for 2018, the year they died. My father was ill and seriously messed up his 2017 return, and when the IRS got done re-calculating it for him, they sent me (i.e., his estate) a letter saying he had a $499 refund. I thought the best way to deal with this was to have it applied to their 2018 taxes, and tidy everything up at the same time. In the meantime, I had also made estimated payments to avoid penalties.

It took about a year for me to get authorized as his fiduciary with the IRS, and every time I called them to try and track this refund, I had to explain the whole thing over again. Eventually, an agent "filled out the form" to request having the refund applied to 2018. I figured to wait until this amount posted to their account before filing their 2018 return.

Multiple followup calls found no updates on this, until finally the IRS stopped answering calls due to the COVID shutdown. I (the estate) just got a letter advising there is a credit on file for their account. The amount in the letter is the total of the estimated payments I made, but does NOT include that $499 refund.

So, as I fill out the tax forms now, should I assert tax payments only in the amount they show in their letter, or should I add the $499 to that amount? Either way the potential for bureaucratic confusion exists. Incidentally, they're due a 2018 refund because of other recalculation issues, the only question is where I should account for the extra $499.

Re: Applying previous year refund

VolvoGirl — Thu, 30 Jul 2020 19:59:06 GMT

If you are doing a 2018 return you must be using the Desktop program. What version?

Go to Federal (Personal for Home & Business)

Deductions and Credits

Then scroll way down to Estimates and Other Taxes Paid

Other Income Taxes - Click the Start or Revisit

Next page scroll down to 2017 Refund Applied to 2018

Click Start or Update by the tax you applied

Re: Applying previous year refund

VolvoGirl — Thu, 30 Jul 2020 20:03:46 GMT

The amount applied from 2017 should show up on 2018 Schedule 5 line 66 which will go to 1040 line 17.

Re: Applying previous year refund

biggap — Thu, 30 Jul 2020 20:15:49 GMT

Using TurboTax Delux 2018 for Macintosh, not sure why it matters.

Re your instructions: I know where/how to enter it, I'm asking whether to enter it.

As of the date of the recent notice, the IRS apparently still hasn't posted the 2017 refund, which was requested over 8 months ago. Assuming that request is still circulating, the amount may still post before they receive my (paper) 2018 return. There's about a 50-50 chance that whichever way I fill out the 2018 return, it will not match what they have in their records. Looking for advice on which "error" would cause me less trouble.

Re: Applying previous year refund

VolvoGirl — Thu, 30 Jul 2020 20:19:32 GMT

The version matters because if you have the Home & Business version the steps are different.

The last sentence in your top question asked where.

"......the only question is where I should account for the extra $499."

Re: Applying previous year refund

biggap — Thu, 30 Jul 2020 20:40:19 GMT

Hmm, OK. I guess I meant "where" in the sense of: "on the 2018 return", or during yet another phone conversation in the future.

See previous comment about the 50-50 chance of telling the IRS something that doesn't match their records.

Re: Applying previous year refund

VolvoGirl — Thu, 30 Jul 2020 21:17:15 GMT

You must have missed my second post that I did say WHERE it shows up on the 1040. Scroll up.