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An overpayment is your refund amount. It means that you overpaid your taxes and get money back.
On the question that asks if you want to apply your overpayment to your next years taxes, you want to say that you do not want to apply the refund so that you will receive your full state tax refund this year.
I selected no I dont not want to add the overpayment to taxes. It did not refund the overpayment.
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