Applying a 2020 Return Overpayment to 2021 Estimated Taxes
IRS postponed the date to file 2020 Forms 1040 and 1040-SR and to pay any related tax until May 17, 2021. However, the due dates for estimated tax payments for 2021 were not postponed. The first 2021 estimated tax installment was due yesterday, April 15.
If an individual taxpayer has a 2020 overpayment and elects to credit it against the 2021 estimated tax, the date on which the 2020 overpayment is applied against the estimated tax depends on:
(a) The date(s) of payment; and
(b) The extent to which an overpayment exists as of April 15, 2021.
An extension of time to file has no effect on either the date of payment or the date on which an overpayment exists:
- To the extent an overpayment of the 2020 tax exists as of April 15, 2021 (because payments made on or before April 15, 2021 exceed the 2020 tax liability), and the taxpayer makes a valid election to apply the overpayment to 2021 estimated tax, the overpayment would be applied as of April 15, 2021, whether the 2020 return is filed on April 15, May 17, or October 15, 2021.
- To the extent an overpayment of the 2020 tax is attributable to a payment made after April 15, 2021 (including any payment made after April 15, but on or before May 17, 2021), that overpayment would not be available for crediting as of April 15, 2021, and would be applied as of the payment received date, not as of April 15, 2021.
Get details here, including examples of this guidance.