File a Superseding Tax Return to Get a Refund for Estimated Tax Overpayments

Due to COVID-19, many taxpayers will owe less estimated taxes in 2020. Learn how to get a refund instead of a credit for those overpayments.

When you file your taxes and are owed a refund you have two options: (1) you can have the IRS pay you the money, or (2) you can have the IRS credit the refund to your following year’s taxes. You make the choice by checking a box on your return. If you pay estimated taxes to the IRS because you have a business, crediting your refund to your next year's taxes can take the place of one or more estimated tax payments. So it can be a good idea. However, what if your income goes down drastically and you owe far less estimated tax than you thought you would? Can you get that refund back right now?

This is a dilemma facing many taxpayers who have already filed their 2019 taxes and credited their refunds to their 2020 taxes. Because of the coronavirus (COVID-19) they will likely earn far less income in 2020 than they thought they would. Thus, they need to pay less estimated tax than usual--perhaps none at all.

You can’t simply tell the IRS to revoke your election to credit your refund to your 2020 taxes because this election is irrevocable. But you can still get your refund back by filing a “superseding tax return.” This is something many tax pros haven’t even heard of, but the Taxpayer Advocate is letting people know about. All you need to do is refile the same 2019 tax return, but check the box directing the IRS to pay you your refund instead of crediting it to your 2020 taxes. Write “SUPERSEDING RETURN” across the top of the first page of the return.

So long as you file the new return before the July 15 deadline (October 15 if you file an extension), the second return supersedes the first and the IRS will send you your refund.

Unfortunately, you’ll have to file the superseding return on paper and postal mail it to the IRS (certified mail is best). The IRS is not set up to handle electronic filings of superseding returns by individuals. As a result, it will take some time for the IRS to process your return and send you your refund. The IRS has not been opening its mail for the past few weeks so there is a large backlog of unprocessed returns. Eventually your return will be processed and you’ll get your money some time during 2020. If you provide your bank or financial institution account information on your return, the IRS will electronically deposit your refund instead of mailing a paper check. This will speed up payment by four to six weeks.

Superseding partnership and corporation returns may be filed electronically by checking the superseding return box on the electronic submission. Thus, such business entities will get their refunds much faster than individual taxpayers.

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