No, it will not have an effect since the 2005 refund
credited to your 2006 tax account will not be sent back to
your 2005 tax account. Instead, you will just owe whatever
tax (plus interest and penalties) are assessed on your 2005
tax account.

See Form 1040 instructions, page 60:

"This election to apply part or all of the amount overpaid
to your 2006 estimated tax cannot be changed later."

Rudy
www.LizcanoTaxServicesLLC.com

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Yes, it's a mess. NEVER apply a refund to pay installments.
Take it in cash and pay the installments with a check so
you know the IRS got it and on time.

ed

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

nearly_blind[at]yahoo.com wrote:

- quote -

Eggzactly! I learned my lesson the hard way. I never not
commit my eggs to future chickens anymore because some of
those eggs may never hatch, and it can be years before you
find out. If there was a problem on the first return and an
incorrect refund is carried over to subsequent returns, then
you can end up with multiple problems, each requiring
amended returns, possible penalties, etc.

That is why I now treat each return as stand-alone and apply
any refund from one year to the next myself, using my own
checks. If anything gets changed years down the line, I
will only need to deal with one problem instead of several.

--
-Ernie-

"There are only two kinds of computer users -- those who have
suffered a catastrophic hard drive failure, and those who will."

Have you done your backup today?

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

1. Assume you have refund for 2005 taxes.

2. You elect to credit it to 2006 tax due rather than
receiving a check.
3. You deduct your refund amount from your 2006 Estimated
Tax payment due on 4/15/2006.

Question:
If 2-3 years later the IRS discovers a problem (e.g. audit,
etc) with your 2005 return and after resolution you no
longer had a refund due for TY 2005, will this also effect
your 2006 taxes, (because the 2005 refund credited to 2006
is removed)? E.g. penalty for failure to pay required
estimated taxes.

thanks.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >