I need to amend 2017:
 Can I apply the refund I assigned to 2018 estimated tax back to the excess tax I owe for 2017, or do I need to send a separate payment?
 Thanks!

[sonyhome]

I tried with turbo tax to pull back the excess money forwarded to 2018 back into my 2017 amended dues, but it seems to be a manual and error prone process, done separately for state and federal, and not supported by the software. I don't know if I can or should do it, or if it's not supposed to be done and I should pay my amended dues separately.

Also I don't know what to do with the California refund paperwork I need to declare in 2018 because that's wrong now too.

[KarenJ]

You should pay for your amended tax due separately.

[sonyhome]

It would be good to have an explanation why:

From my perspective, not getting my 2017 refund and applying it to 2018 is loaning money to the government. Hence if I owe more for 2017, I would not want to pay penalties and fees for that since the government already holds more of my money than I owe for the amended return.

* Would the 2018 estimated tax payments not help avoid penalties for the 2017 amended return?
* Should the payment be separate only to simplify work with Turbo Tax, or is it a tax rule?

[KarenJ]

Yes, what you want to do makes a lot of sense. It is just that the IRS will do what you requested.  If when you filed your 2017 tax return, you checked that you want to apply the refund to 2018 that is exactly what the IRS will do with the refund.  You might want to call the IRS and request that the money be moved to your 2017 tax account year, however, if there is currently no balance due for your 2017 account year (if you have not filed your 2017 amended return yet), they may not be able to move it to a zero balance year. Please call the IRS 1-800-829-1040.  

[sonyhome]

Karen,

Thank you for this detailed explanation, it is clear.

I finished my amended tax return following what the software tells me to do. I think TurboTax has a bug.

Federal:

* Original return I had a 8K refund, which I applied to 2018 estimated tax (1040 line 77).
* Amended return TurboTax asks me to pay $5K, but now there's only $3K applied to 2018 (1040 line 77), and it shows I overpaid $3K (1040 line 75) and that I owe nothing (1040 line 78) with no tax penalty (1040 line 79).

=> 1040 looks correct and 2018 estimated tax was corrected to owe nothing, BUT TurboTax reports I should pay $5K.

So if I pay the $5K and the 1040 doesn't apply the $5 to 2018, it means TurboTax accounting might off when I file 2018. Hopefully IRS accounting would catch it and apply the $5K to my 2018 refund if I send the check?


California:

* Original return I had $2.2K applied to 2018 estimated tax (540 line 95)
* Amended return still has $2.2K applied to 2018 estimated tax (540 line 95)
* Amended return shows I overpaid $500 (540 line 94)
* Amended return asks me to pay $1.7K (540 line 114)

=> This looks correct but 2018 estimated tax was not adjusted.

Following your advice I should not change line 95 to $500, which would adjust line 114 to zero?

I think this requires filing a bug report on TurboTax. Note I have $500 of AMT due which might have thrown a wrench in the accounting logic.

Sorry this is long 🙂