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Tax Refund vs Apply to this Year?
Old 03-03-2021, 09:50 AM   #1
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Tax Refund vs Apply to this Year?

I've just received K-1's for a partnership and have almost finalized my 2020 tax return. I still haven't fine-tuned my tax estimating process and it looks like I am due $6,000 in Federal and State income taxes. Rather than file for a refund, and waiting how many months??, I am thinking seriously about asking that the refunds be applied to this tax year, and not paying in estimated taxes. I welcome your comments and experiences doing that.
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Old 03-03-2021, 10:08 AM   #2
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If you get a refund and then need to turn it around and make estimated payments a short time later, I would just apply the refund to 2021.... it's not like it will be earning a whole lot of interest sitting in cash.
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Old 03-03-2021, 10:12 AM   #3
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Originally Posted by pb4uski View Post
If you get a refund and then need to turn it around and make estimated payments a short time later, I would just apply the refund to 2021.... it's not like it will be earning a whole lot of interest sitting in cash.
Thatís where Iím at. My overpayment is over $5K. Iím just going to roll it forward. It would just go into my cash account anyway so I wonít be giving up any material interest. Iíll use it up when I do my ROTH conversation at year end by not having tax withheld on the withdrawal.
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Old 03-03-2021, 10:35 AM   #4
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We chose to pay towards the next year.
Why get a refund if you are going to turn around and send it back?
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Old 03-03-2021, 12:19 PM   #5
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We chose to pay towards the next year.
Why get a refund if you are going to turn around and send it back?
Today's the tax day, but I am anticipating a larger-than-usual refund because we paid the safe harbor amount in December and 2020 income was a little lower due to higher QCDs. So I am kind of on the fence. Foregone taxable interest income will be less than $50 assuming we again pay in December. We'll see.

If we had to pay quarterly I definitely wouldn't bother but we pay via IRA withholding in December so we'll have 9+ months of float.
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Old 03-03-2021, 06:08 PM   #6
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If the turnaround time is small and/or the amount involved is small, then I'd agree simply rolling over a refund into the next year's taxes is a good idea. Many of us, including my ladyfriend and I, are getting unexpected refunds on our 2020 federal tax returns because of the second stimulus check not received and instead taken as a tax credit. She will likely owe money on her 2021 return anyway although I will probably get a refund. Still, I don't mind forgoing a small refund this year. Hopefully, the IRS will be mostly back to normal a year from now so refund checks will resume their pre-Covid schedule.
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Old 03-03-2021, 06:17 PM   #7
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We try really hard not to have a refund. But if we do, we generally apply it to the next year's estimated taxes so as not to have to worry about timing of receipt, etc.
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