Payments Applied from a Previous Year

Taxpayers who overpay their income taxes in one year can apply all or part of their overpayment to the next year's tax. This is done by indicating on their return the amount to apply to the next year's estimated tax.

Ask the taxpayer:

• Did last year's return show an overpayment?
• Did you apply any part of the overpayment to this tax year?

If the answer is "yes" to both questions, ask to see the 2010 tax return to document the amount of tax applied to 2011. Add this amount to the estimated tax payments and enter the total on the applicable line. You will be confirming information provided by the taxpayer that should be included on the intake and interview sheet.