Just another thought on various tax-related issues:
In 2009, I did not file our family’s income tax return until late October due to a combat zone extension. Due to the the same combat zone service and the subsequent qualification for the Earned Income Credit, we were to receive a large refund. Since we were filing again in January for 2010, and we expected to owe money, I selected the option where you apply one year’s tax refund to the following year’s tax payments.
DO. NOT. DO. THIS.
There are many reasons that I say this. First, by making this choice, I lost the ability to deal with issues within an individual tax year. When the IRS started messing with my 2009 return, I couldn’t file my 2010 return on time. And, since it turned out we got a refund in 2010 also, it just meant that the IRS kept my money longer. And there is no good reason to give money to the IRS if it isn’t required. (And it shouldn’t be required, but that is a story for another day.
So, what is the point of this post? If you are getting a refund, and you think it makes sense to apply it to the following year’s tax bill, think twice. Or three times. Put it in a savings account, or pay off debt, but please don’t let it stay with the IRS. It just complicates things.
Obviously, I am not a tax accountant nor IRS agent. This is my opinion. Consider it and make the best decision for your situation.