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Posted by Kalyan on March 30, 2007, 10:27 pm
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I am wondering what would happen if I apply this year's tax
refund to next year. I realize that I will not get any
refund this year if I do this. If I get a refund next year
when I do taxes this refund will be applied to it and I will
get the total refund, is that correct?
TIA
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Posted by Ernie Klein on March 31, 2007, 9:55 pm
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> I am wondering what would happen if I apply this year's tax
> refund to next year. I realize that I will not get any
> refund this year if I do this. If I get a refund next year
> when I do taxes this refund will be applied to it and I will
> get the total refund, is that correct?
I have done that, many years ago and it left me very uneasy.
Why? Well, when I owe additional tax, my cancelled check is
proof to me that the IRS received my forms and payment. If
I am due a refund, the IRS's check (or direct deposit) to me
is proof that they received my tax forms. If I ask for a
refund to be applied to next years tax, I receive no
conformation what-so-ever that they even received my tax
forms.
Come next year, I file my taxes assuming they applied my
refund and file it. If something went wrong with the first
refund and it didn't get properly applied to next years
taxes it will take much more effort to fix last years
problem than it would have taken to simply have had the
refund sent to me so I know I received it.
That way I never have this years taxes depending on what
happened last year.
--
-Ernie-
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Frederick Lorca on April 2, 2007, 5:58 pm
Please log in for more thread options > If I ask for a refund to be applied to next years tax,
> I receive no conformation what-so-ever that they
> even received my tax forms.
>
> Come next year, I file my taxes assuming they applied my
> refund and file it. If something went wrong with the first
> refund and it didn't get properly applied to next years
> taxes it will take much more effort to fix last years
> problem than it would have taken to simply have had the
> refund sent to me so I know I received it.
This problem can be avoided by asking to have most of the
overpayment credit elected and small part, perhaps $50 or
$100, refunded. Your receipt of the refund is an implied
acknowledgement that the rest of the overpayment was credit
elected.
Frederick Lorca
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Frederick Lorca on March 31, 2007, 9:55 pm
Please log in for more thread options > I am wondering what would happen if I apply this year's tax
> refund to next year. I realize that I will not get any
> refund this year if I do this. If I get a refund next year
> when I do taxes this refund will be applied to it and I will
> get the total refund, is that correct?
2006 tax liability = $10,000
2006 payments = $12,000
2006 overpayment = $2,000 (credit elected to 2007)
2007 tax liability = $11,000
2007 payments = $14,000 ($12,000 withholding + $2,000 credit
elect from 2006)
2007 overpayment = $3,000
You would be entitled to a refund of the $3,000, or you can
elect to have some or all of it credit elected to 2008.
Frederick Lorca
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Herb Smith on March 31, 2007, 9:55 pm
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> I am wondering what would happen if I apply this year's tax
> refund to next year. I realize that I will not get any
> refund this year if I do this. If I get a refund next year
> when I do taxes this refund will be applied to it and I will
> get the total refund, is that correct?
Mathematically, that is correct. However, consider what you
are doing with your money. First, you "earned" a refund for
2006 by having too much money withheld and given to the
Treasury to hold (at no interest). Now, you want to let them
continue to hold your money while also continue to be
overwithheld for TY 2007, creating an even bigger refund
next year. Remember, the Treasury does not pay interest on
these overpaid funds. Financially, you would be just as well
off taking the refund and stashing the money in your
mattress!
If you apply this year's refund to next year, then you
should REDUCE your withholding during the year, so that you
neither owe or get a large refund next year. That would give
you more in your weekly/ monthly paycheck all through the
year.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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