Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Applying 2018 Federal Tax Overpayment to 2019 Tax Estimate
Old 01-28-2019, 02:30 PM   #1
Full time employment: Posting here.
 
Join Date: Oct 2017
Location: Chapel Hill, NC
Posts: 530
Applying 2018 Federal Tax Overpayment to 2019 Tax Estimate

I spent today doing a first draft of my 2018 taxes on Turbo Tax. I will probably wait to actually file for a few more weeks in case there are any changes. I pay estimated taxes. To my surprise I overpaid my Federal estimates for 2018 by about $4000. That never happened before (my income was a little less than I had estimated and I had forgotten that not all my Social Security is taxable). Anyway, Turbotax gave me a choice of getting a refund or applying the over payment to my 2019 estimate. I am inclined to apply the refund to my 2019 estimate, that will mean I will not have to make the first couple estimated tax payments and will simplify things. Has anyone applied an overpayment to the next year's estimate? Any problems I should look out for?

Thanks!
__________________

harllee is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-28-2019, 02:38 PM   #2
Full time employment: Posting here.
 
Join Date: Jan 2018
Location: NE Ohio
Posts: 551
Take the $4000 refund, where it can work for you instead of the federal govt.
__________________

gwraigty is offline   Reply With Quote
Old 01-28-2019, 02:39 PM   #3
Recycles dryer sheets
jimbee's Avatar
 
Join Date: Oct 2010
Posts: 435
I would collect the tax refund and put it in my online savings account, getting 2.1% interest until I have to pay my estimated taxes. The result isn't a lot of money, but it may be enough to make the five minutes needed to setup the estimated payment worthwhile. It sounds like you're going to have to estimate your taxes anyway.


Estimate how much interest you can collect by delaying the payment to April and June.
jimbee is offline   Reply With Quote
Old 01-28-2019, 02:55 PM   #4
Full time employment: Posting here.
 
Join Date: Oct 2017
Location: Chapel Hill, NC
Posts: 530
The first tax estimate will be due 4/15 and the next one is 6/15 so I would only earn at most a couple months of interest (who knows how long it will take to get refunds this year), hardly worth the time it will take to get the refund and then have to turn right around and send in the estimate. I estimate the amount of interest I would earn would only be a few dollars.
harllee is offline   Reply With Quote
Old 01-28-2019, 02:58 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 4,905
I prepare the tax returns for my best friend and my ladyfriend. A few times in recent years, when either of them was slated to get a small refund ($50 or less), they chose to apply the amount to the following year's taxes. They did this because it was a minor nuisance to deposit a small check and they didn't want to do it electronically.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is online now   Reply With Quote
Old 01-28-2019, 03:06 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 1,157
Quote:
Originally Posted by harllee View Post
The first tax estimate will be due 4/15 and the next one is 6/15 so I would only earn at most a couple months of interest (who knows how long it will take to get refunds this year), hardly worth the time it will take to get the refund and then have to turn right around and send in the estimate. I estimate the amount of interest I would earn would only be a few dollars.
I think you are right. Why get a refund and turn around a few weeks later and send it in.

Since retiring I have not made any quarterly payments. In December, after estimating the taxes due, I make a withdrawal from my tIRA and withhold most of it as federal and state taxes. Of course, that money is taxed as well, so I need to account for that.
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is online now   Reply With Quote
Old 01-28-2019, 03:43 PM   #7
Administrator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee ba gum
Posts: 23,944
As an overseas resident we file in May and this last couple of years we have overpaid by a sum close to the first estimated payment so we simply apply the overpayment to next year’s taxes.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
Alan is offline   Reply With Quote
Old 01-28-2019, 03:43 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 1,905
I do monthly withholding so I take the refund and put it into savings. True it up when I file or I make an educated guess in April allowing for some over payment if I don't file until October.
Another Reader is offline   Reply With Quote
Old 01-28-2019, 04:38 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 7,565
Quote:
Originally Posted by Another Reader View Post
I do monthly withholding so I take the refund and put it into savings. True it up when I file or I make an educated guess in April allowing for some over payment if I don't file until October.
How are you getting your refund before you file? What is it that you "true up"?
RunningBum is offline   Reply With Quote
Old 01-28-2019, 05:04 PM   #10
Recycles dryer sheets
 
Join Date: Feb 2017
Location: SF Bay Area
Posts: 319
To the OP, there are no risks or concerns with applying the 2018 over payment to 2019, especially if you would normally make estimated payments.

Btw, it is not an all or nothing decision. You could apply enough to cover the 1st ES payment and then refund the balance, or any other split as you see fit.
ocean view is offline   Reply With Quote
Old 01-28-2019, 05:24 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 21,752
Quote:
Originally Posted by harllee View Post
I spent today doing a first draft of my 2018 taxes on Turbo Tax. I will probably wait to actually file for a few more weeks in case there are any changes. I pay estimated taxes. To my surprise I overpaid my Federal estimates for 2018 by about $4000. That never happened before (my income was a little less than I had estimated and I had forgotten that not all my Social Security is taxable). Anyway, Turbotax gave me a choice of getting a refund or applying the over payment to my 2019 estimate. I am inclined to apply the refund to my 2019 estimate, that will mean I will not have to make the first couple estimated tax payments and will simplify things. Has anyone applied an overpayment to the next year's estimate? Any problems I should look out for?

Thanks!
Yes, I have done that in the rare event of a refund and no, never any problems at all. Just be sure to enter it into your 2019 tax return. Turbotax will carry it over to 2019 for you.

Since I have estimated tax due on 4/15 and I have rarely completed my taxes before the end of March due to forms/info delayed from my brokerage, I never worried about a few weeks worth of float to me.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 01-28-2019, 05:30 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 1,461
I roll it over and skip the 1st pymt (due about the same time you'd get the refund)
gayl is offline   Reply With Quote
Old 01-29-2019, 01:23 PM   #13
Full time employment: Posting here.
 
Join Date: Oct 2017
Location: Chapel Hill, NC
Posts: 530
Quote:
Originally Posted by ocean view View Post
To the OP, there are no risks or concerns with applying the 2018 over payment to 2019, especially if you would normally make estimated payments.

Btw, it is not an all or nothing decision. You could apply enough to cover the 1st ES payment and then refund the balance, or any other split as you see fit.
Thanks for this tip. I am thinking I will rollover enough for the first estimate and request a refund of the rest and spend that "found" money on something fun.

BTW as discussed on another forum thread there appears to be a mistake on the Turbotax federal form so I guess I will be waiting to file until that mistake is corrected.
__________________

harllee is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Will ACA ask for my 2018 income or estimated 2019 income when we sign up in 2019? GNXGuy Health and Early Retirement 5 11-05-2018 09:15 PM
Overpayment on EFTPS - question omni550 FIRE and Money 11 03-22-2018 11:12 AM
Recoupment of Pension Overpayment Cruise42 Hi, I am... 45 12-14-2016 04:39 PM

» Quick Links

 
All times are GMT -6. The time now is 10:55 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.