I was wondering is there a limit on number of years where a tax payer can apply his or her refund to future years. for example, if a tax payer had 6000 in refund in 2007 and he or she keeps sending the balance to the following year and for this example still has 5000 left from that refund that he has applied to 2012.
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Why would there be a limit on rolling your refund forward? There is no real economic benefit to the taxpayer and technically an interest potentially earned penalty. If you were the IRS, would you require people take your money?Originally posted by ardi600 View Post -
But why ??
There is nothing "wrong" with doing so, but it certainly makes little (no!
) financial sense.
It might get a bit sloppy keeping track of continuing refunds/estimated payments/refunds/estimated payments as that is what is really occurring. If the client is doing the same thing with state taxes, the matter of timing could become an issue.Comment
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Most of my clients who do this, do it because of timing issues. They are the late filers, sometimes even extenders. By the time their taxes are completed, the first and 2nd quarters for the current year are already due. (And they haven't paid the first quarter yet waiting for the final figures from the prior year.) So I have them make a substantial payment with the extension. What isn't needed is applied to the current year as an estimated payment.
Note that each year's refund is independent of each other. The amt applied to the following year is treated as an estimated payment, just as if it were mailed separately. That's why you cannot get it back if you determine there is a large overpayment. So the $6K refund from 2007 was used in 2008. The 2008 refund is independent of 2007. If there was a refund in 2008, it can be applied to 2009. And so forth.Last edited by Burke; 08-07-2012, 08:51 PM.Comment
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