What prepayment? A payment with an extension to file or an estimated payment? Or something else like withholding?
Those are subtracted from the tax on your income after the Standard Deduction is subtracted from your gross income.
Your prepayment amount is applied against the total taxes owed. You will then have to pay any balance.
Gracias:
Think you answered it. But at the end, Turbo Tax recommended standard deduction which I used and still ended up owing taxes. So, I had no way of knowing how TT was accounting for the money I sent in with my extension request. Was it already accounted for to reduce my taxes owed?..... Not an accountant, just wondering....Is your answer YES? , was it considered when calculating what was owed? Thanks for your help.
If your extension payment did not automatically show up on 1040 Schedule 5 line 71 which goes to 1040 line 17 you need to enter it. So make sure it's not already there before you enter it!
You can type estimates paid in the search box at the top of your return and click Find and it will give you a link to Jump To the screen where you enter Extension Payments.
To enter the amount you paid with an extension (including state extension) go to
Federal Taxes (or Personal for desktop H&B version)
Deductions and Credits
Then scroll way down to Estimates and Other Taxes Paid
Other Income Taxes - Click the Start or Update button
Next page second section Payments with Extension
Either Visit All or Click Start or Update by the extension you paid