What Happens if You Overpay the IRS?

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Most taxpayers try to avoid paying the IRS even one cent more than they owe. But a surprising number of Americans overpay their taxes every year.

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In addition to those who pay too much in withholding or estimated taxes throughout the year and receive a refund at tax time, many others do not realize until after they file their return that they have overpaid their taxes. This can happen from unnoticed math errors, misunderstood deductions or other mistakes.

If you find yourself in this camp, there are ways that you can get your overpayment back — but you’ll have to file the right forms and meet the IRS deadline. Here are the steps you should take if you believe you have overpaid your taxes.

Verify You Are Correct

Before you take the time and trouble to request an overpayment reimbursement from the IRS, be sure that you are entitled to it. If you find a math error in your return, for example, double- and triple-check it to be sure that you’ve calculated correctly. If you have any questions, verify with a tax advisor or accountant.

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Amend Your Return

The best way to ensure that you’ll get your overpayment back from the IRS is to file an amended tax return. Filing an amended return is similar to filing your regular return. In fact, you’ll use Form 1040-X to file an amended return, which is just a slightly different version of the Form 1040 you used to file your original return.

But on Form 1040-X, in addition to entering the income, deductions and credits you originally reported,  you’ll update the portions of your original return that were incorrect. If you overpaid your taxes, you have two choices: ask for a refund, or have your overpayment applied to your estimated taxes.

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Make Your Request in a Timely Manner

If you realize that you overpaid your taxes, you shouldn’t procrastinate in filing your amended return. The IRS requires that you submit an amended tax return within three years of when you filed your original return or within two years of when you paid the tax, whichever is later.

However, if you filed your return early, the IRS doesn’t start the clock until the day your return was actually due, which is typically April 15 (but April 18 in 2023). The only exception to this rule is if you have a medically documented disability that prevents you from managing your financial affairs.

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Unfortunately, the IRS doesn’t refund overpayments via direct deposit, as it does for the bulk of traditional refunds. Rather, it will mail out a check to your address of record. Even worse, this process is currently taking longer than 20 weeks.

For this reason, it can sometimes make sense to simply apply your overpayment to your estimated taxes. If you won’t get your check for five months or more, you may very well be filing your next year’s taxes before that check would even arrive in your mailbox. In that case, applying your overpayment to your estimated taxes effectively speeds up the time it takes to get your money back.

Alternate Option: Wait for the IRS

In the case of simple errors, the IRS will often catch your mistake and make its own corrections. In this case, you’ll receive a letter in the mail — along with a check — if you’ve legitimately overpaid your taxes. 

Unfortunately, it’s not the job of the IRS to catch an overpayment you may have made. In fact, the corrections it makes in favor of taxpayers are generally limited to obvious math errors. In other words, if you fail to claim a deduction or tax credit that you deserve, the IRS isn’t going to go out of its way to let you know about it. That’s why it usually pays to work with an accountant or tax advisor.

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But even if the IRS does determine that you made an overpayment, the timetable for receiving your notification and payment is uncertain. If you’re 100% sure that you’ve overpaid the IRS, it’s always best to take action rather than waiting for the agency to make a move on its own.

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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