...to my 2007 taxes. I was not sure what to put so I put no and I have a refund. When I put yes, I will not get a refund. What gives? Are you supposed to apply an overpayment to the next year's tax return? This is for the state, not the IRS.
2007-02-09 03:13:53 · 5 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
It is a choice that the IRS gives you. If you think your tax situation will change where you may have to pay the IRS next year they give you the option of applying your current year refund to that balance.
In my opinion, there is no reason to apply the return to future years but it varies depending on circumstance.
2007-02-09 03:21:44 · answer #1 · answered by R Worth 4 · 2⤊ 0⤋
It's probably better to get the money back and not apply it to next year's tax return. It's always better to get money owed to you sooner rather than later because money accumulates interest (you can make it grow) and inflation reduces it value ($100 a year from now is worth less than $100 today).
However, if you itemized your deductions on your federal form this year, you may have to pay tax on the state refund you received next year, and you will receive a G2 from your state next year. The amount of your state refund had never been taxed as income in 2006, so you have to pay tax on it in 2007. For that reason, in some complicated circumstances it is better for some people to apply their state refund to next year's taxes, but it is not common.
2007-02-09 03:29:29 · answer #2 · answered by trevdl 2 · 0⤊ 0⤋
If you knew you were going to owe the state for 2007, and didn't want to bother with filing quarterly state returns, then it could make sense. Most of the time, it makes a lot more sense to just take the refund - if you have a state refund this year, you very likely would next year anyway.
2007-02-09 04:41:08 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
The " over payment " is like a State savings account. In case that you owe any tax due next year, State revenue will use this to deduct out of your refunds for that year. You always can say : " NO " just take it one year at a time.
2007-02-12 21:52:21 · answer #4 · answered by MINH H 3 · 0⤊ 0⤋
NO!!!!! Don't apply your refund to next years return. That is a way for the Govt to collect interest from YOUR money all year!! You did the right thing. Plus, if you don't owe taxes next year, you will have to apply to get that money back..... They try to trick you into doing this. You paid your tax, they owe you money.
2007-02-09 03:18:46 · answer #5 · answered by surelycoolgirl 5 · 2⤊ 0⤋