Not Possible to Adjust Overpayment of Estimated Tax

[erick00]

I talked to the IRS today about the following scenario. Let's assume I estimated my 2025 annual tax liability to be $X. I would therefore may $X/4 before the deadline for each quarter in 2025. Now assume I overpaid the first quarter by $Y.  My question was "Can I move $Y payment I already made and have it credited to the 2nd quarter instead of the first quarter? After a long time the answer came back as "No".  Therefore, I am basically giving the IRS and interest free "loan' of $Y for one year. 

Note I googled this prior to calling the IRS and got different answers. I have tried another agent at the IRS office (yet) but there you go...

[JohnB5677]

Yes, you can adjust an overpayment in the first quarter and reduce a future payment.

Estimated tax payments are controlled by you, but regulated by the IRS.

• The IRS requires you to "Pay as you go."
• That means that you must pay enough each quarter to cover the money that you earned.
• Your income can change during the year, and you can make adjustments.

You will have to prepare a new 1040-ES if you want to make a change.

• See a blank on pages 10 & 11

If you just want to make an adjustment you do not have to do the calculation, you can simply fill it  by hand.

[erick00]

Do we have any IRS agents out there who can confirm or deny? I was told that after the first quarter 2025 is over you cannot change the amount of the payment already made for the first quarter. If you underpay the remaining quarters so that the total for the year "comes out right" you may still be subject to penalties for the underpaid quarters unless you file a form stating your income was not uniform throughout the year.

[JohnB5677]

Your last statement is correct, but in your initial post you stated "Now assume I overpaid the first quarter by $Y." 

• If you overpay the first quarter you can make a future adjustment
• If you underpay the first quarter you MAY be subject to an underpayment penalty
• You are also correct that the once the quarter is over it's over.
• However, the first quarter does not end until April 15th, 2025.
• IRS Estimated taxes

The underpayment penalty will be assessed if any of these apply:

• "If you don’t pay enough tax through withholding and estimated tax payments, you may have to pay a penalty."
• "You also may have to pay a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return."

To avoid the under payment penalty:

• The amount you owe is less than $1,000, after subtracting withholding and refundable credits.
• You paid 90% of the tax that you owed for the current year.
• You paid 100% of the previous year tax, (110% for higher incomes).
• If your previous year's adjusted gross income was more than $150,000 you will have to pay in 110% of your previous year's taxes to satisfy the "safe-harbor" requirement.

"Typically, underpayment penalties are 5% of the underpaid amount, and they're capped at 25%. 

Underpaid taxes also accrue interest at a rate that the IRS sets annually."

To avoid this situation it is recommended that you adjust your W-4 with your employer or pay estimated taxes.

Underpayment of Estimated Tax by Individuals Penalty