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Question

My client paid the first estimated tax installment in April and is now receiving a refund. How can I apply the refund to the second, or later, estimates?

Answer

Enter a code in the Application of 2021 Overpayment field in Screen Est in the Payments folder to indicate how much of the refund should be applied. Enter any Form 1040-ES - 2022 declaration code other than 4, 5, 7, or 9 to indicate how to calculate the amount of the total estimates. Enter the amount of the first installment that was paid in the 2022 estimates paid: 1st payment field. Use the No. of 2022 vouchers desired codes to indicate which vouchers should print.

For example, Susan determined her estimated tax liability would be $8,000 and she paid $2,000 on April 15 with her 1040-ES. Her tax return was put on extension. On June 1 her return was completed with a refund of $3,000. Her total estimated tax liability was recalculated to be $6,000. Susan would like to apply $1,000 of her refund to her estimated taxes. Enter code 8 in the Application of 2021 overpayment field and enter 1,000 in the Amount for code #5 or #8 field. Enter code 1 in the Form 1040-ES - 2022 declaration field and 2,000 in the 2022 estimates paid: 1st payment field. Select 3 = Last three vouchers for No. of 2022 vouchers desired. The application calculates the estimated payments of $1,500 each ($6,000 total), applies the overpayment applied and the estimate paid ($3,000 total) to the earlier estimates, and prints the last two vouchers.

Related topic: Estimated taxes FAQs (1040)