Question on applying 2019 tax refund to 2020 taxes

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tibbitts
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Question on applying 2019 tax refund to 2020 taxes

Post by tibbitts » Thu Mar 26, 2020 12:51 pm

In the past, I had always assumed a tax payment applied from a refund would count toward Q1 tax payments, since it was always made in Q1. But maybe like withholdings it actually didn't count toward any particular quarter? Now that tax filing can be delayed until July 15, how will refund-based payments apply to TY2020 - Q1? Doesn't matter? Q2 (only if filed by June 15? - Ugh, I wish they would fix that)? Q3 if filed after June 15?

livesoft
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Re: Question on applying 2019 tax refund to 2020 taxes

Post by livesoft » Thu Mar 26, 2020 1:09 pm

I assume that the taxes were paid in 2019 even before 2020 started.
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tibbitts
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Re: Question on applying 2019 tax refund to 2020 taxes

Post by tibbitts » Thu Mar 26, 2020 1:40 pm

livesoft wrote:
Thu Mar 26, 2020 1:09 pm
I assume that the taxes were paid in 2019 even before 2020 started.
Yes, but that doesn't mean they would necessarily be applied accordingly, since the decsion to allocate them to 2020 taxes had not been made in 2019. So while logically you could argue that the amount had been paid in 2019, I don't know whether that translates to the crediting date for 2020 taxes, or whether the decision date to allocate them to 2020 taxes is what counts.

H-Town
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Re: Question on applying 2019 tax refund to 2020 taxes

Post by H-Town » Thu Mar 26, 2020 1:45 pm

tibbitts wrote:
Thu Mar 26, 2020 1:40 pm
livesoft wrote:
Thu Mar 26, 2020 1:09 pm
I assume that the taxes were paid in 2019 even before 2020 started.
Yes, but that doesn't mean they would necessarily be applied accordingly, since the decsion to allocate them to 2020 taxes had not been made in 2019. So while logically you could argue that the amount had been paid in 2019, I don't know whether that translates to the crediting date for 2020 taxes, or whether the decision date to allocate them to 2020 taxes is what counts.
In case of safe harbor payment, you don't know 2020 taxes until you have 2019 taxes. So long you have paid 127.50% of the 2019 taxes, you would cover Q1 2020 tax.

To your original question: yeah, I think all payments (including 2020 estimate tax) is due on 7/15.

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Re: Question on applying 2019 tax refund to 2020 taxes

Post by grabiner » Thu Mar 26, 2020 1:50 pm

If you check the instructions for Form 2210, you will see that a payment applied with your 2018 return is treated as a first-quarter payment for 2019. Thus, if your refund applied to estimated tax, plus your actual first-quarter payment, is at least 1/4 of the minimum payment, then you met the required payment for the first quarter.
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livesoft
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Re: Question on applying 2019 tax refund to 2020 taxes

Post by livesoft » Thu Mar 26, 2020 1:54 pm

Our intention is to apply a 2019 tax refund to our 2020 taxes. I had my spouse adjust her tax withholding to zero in 2020. I have no fear that we would owe any penalties when we finally file our 2019 tax return in October.
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lstone19
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Re: Question on applying 2019 tax refund to 2020 taxes

Post by lstone19 » Thu Mar 26, 2020 2:02 pm

Estimated payments are applied in the order received and are not assigned (at time of payment) to a particular quarter. A previous year's overpayment applied to the next year's tax is considered paid on 1/1 (or 4/15 or any date in between as it doesn't matter). With the current 1st quarter due on 7/15 but 2nd quarter due a month earlier, almost certainly, any overpayment carried forward will be applied to the first payment due regardless of what quarter that's called. If you look at how the penalty calculation on Form 2210 works, the dates must be sequential; all payments before the first due date apply to the first due date; all payments between the day after the first due date and the second due date plus any excess carried over from the first due date apply to the second due date; repeat for the 3rd and 4th due dates. As the payments that are applied to a due date are from a range of dates, to go back in time to the second due date creates an overlap of dates. So no matter what they call them, the change effectively makes the 1st quarter due on 6/15 and the 2nd quarter on 7/15.

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