Thanks so much for the insightful answers! Hypothetically, if have not paid enough money on Sep 15 towards estimated tax, will it reduce my Underpayment penalty / interest by applying the refund now rather than wait until Jan 15th? Appreciate all the help!
I love theoretically!! So, if you choose choose to apply your refund to next year's taxes, the refund amount will apply to the first estimated payment until all of the refund has been used. So even if you apply the refund now it still applies to the first quarter.
So, since it is applied to the first estimated payment, which this year was April 15th, that would frontload the first quarter estimated payment, which would have the largest interest component. Potentially the first quarter payment is now larger then your estimated tax liability for the quarter as a result. This would assumes you made the first, second, and will make the fourth quarter payments.
Thank you for the opportunity to answer your questions @prasadbhusa
All the best,
Marc T.
TurboTax Live Tax Expert