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Topic: Voluntary Estimated Tax payment from Refund?  (Read 236 times)

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Voluntary Estimated Tax payment from Refund?
« on: January 07, 2022, 08:41:42 PM »
I'll be receiving this year income that may or not be taxed by the IRS. Although i've requested that there is withholding made by the U.S. payer, i'm not getting the warm and fuzzy feeling that this will happen.

If withholding is not made, i'll likely be paying a underestimated penalty along with any other penalties too. So my question is:

From an expected refund coming this tax season, can I make a voluntary one off withholding from that refund? I may well make the voluntary payment and find that withholding has been done and none of the voluntary estimated tax payment was needed. If that is the case and for example I made a $1,000 estimated payment from refund, would that then be added to a refund next time that I could then have sent to my bank as usual? Would the $1,000 stay as a credit for future years if things were even? or chipped away at if I owed?

I guess also, does the IRS care if you 'hold a bank year after year' just in case?

Thanks


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Re: Voluntary Estimated Tax payment from Refund?
« Reply #1 on: January 07, 2022, 09:42:52 PM »
If you are due a refund you can definitely choose to have it go against the following year. I did this on my 2020 return. On my 2021 return I will list it under the tax credits along with the estimated payments I made during 2021.

The IRS does not care if you do this year after year, I often apply all or part of my refund to the following year’s taxes.
Dual USC/UKC living in the UK since May 2016


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Re: Voluntary Estimated Tax payment from Refund?
« Reply #2 on: January 21, 2022, 07:28:23 PM »

If you are due a refund you can definitely choose to have it go against the following year. I did this on my 2020 return. On my 2021 return I will list it under the tax credits along with the estimated payments I made during 2021.

The IRS does not care if you do this year after year, I often apply all or part of my refund to the following year’s taxes.

I think i'll put $1,000 towards any future estimated tax from my 2021 refund. This is just to be on the safeside as if the U.S. payer does not withhold, then i'll be likely paying a underestimated penalty. I'd likely; as you Durhamlad, apply the part refund to the following year and keep doing that for the foreseeable future.

One point however, if you decide to take some of the estimated tax in future years. Where do you report that credit? Or is it automatically applied to line 32 of the 1040, all ready for the 'would you like to make estimated tax payments for next year' were the process is repeated?

 


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Re: Voluntary Estimated Tax payment from Refund?
« Reply #3 on: January 21, 2022, 07:40:55 PM »
I think i'll put $1,000 towards any future estimated tax from my 2021 refund. This is just to be on the safeside as if the U.S. payer does not withhold, then i'll be likely paying a underestimated penalty. I'd likely; as you Durhamlad, apply the part refund to the following year and keep doing that for the foreseeable future.

One point however, if you decide to take some of the estimated tax in future years. Where do you report that credit? Or is it automatically applied to line 32 of the 1040, all ready for the 'would you like to make estimated tax payments for next year' were the process is repeated?

Using TurboTax the step by step guides you through the tax credit section and feeds through automatically from the previous year’s return.  I expect all the tax prep software do similar.
Dual USC/UKC living in the UK since May 2016


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