I am receiving a refund from the state of PA this year. I have withholdings and estimated payments. Is it smarter to just let the refund carry forward or is that messy?

I know that I will owe more than my withholdings again in 2021 so if take take this refunds I will have to make estimated payment again. I am just not used to not having to pay the state. This is due to investment income which is difficult to estimate from year to year.

296

Expert Alumni

Mar 25, 2021 11:02:00 AM

If you're using TurboTax and apply your 2020 refund to tax year 2021, it's not messy at all. TurboTax stores the information and when you do your 2021 income taxes, the 2020 refund will be applied to your 2021 return.

However, if you don't think the PA 2020 refund will be sufficient to cover your PA estimated taxes, by all means, also pay estimated taxes.

See Can TurboTax calculate the estimated payments for next year's state taxes?

Level 15

Mar 25, 2021 11:14:42 AM

For federal, if you apply a part of your refund, it will serve as your first quarterly Estimated Tax payment.

I assume state will work the same way. I never tried it.

It's all a matter of your personal cash flow needs.

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I am receiving a refund from the state of PA this year. I have withholdings and estimated payments. Is it smarter to just let the refund carry forward or is that messy?