If you applied your prior year's tax return (e.g., your 2024 return), you can choose to apply some or all of your refund to the following year's estimated taxes (e.g., 2025 estimated taxes). The IRS will automatically apply the refund amount to Q1 tax payment until the entire refund amount is used. This can help you get a head start on your tax obligations.
Enter the refund amount in the Quarterly Tax Checklist
We recommend you enter the original, full amount of the refund as a payment in Q1. This will ensure that the credit is applied when accounting for the Q1 estimate and future quarters.
Alternatively, you can also enter the amount of the refund applied towards 2025 estimated taxes each quarter the credit is applied. For example, if you had a refund of $3500 and you owed $1500 in estimated tax in Q1, enter the payment made of $1500 in Q1. You’d then have $2,000 in credit left for Q2 and future quarters, until that credit is used, and you’d return to normal payments.