What Happens If You Overpay Your Taxes?

If you're taking your taxes seriously, paying all your quarterly taxes on time, filing your annual return on time and avoiding IRS penalties – congratulations! You have an excellent credit score and life's good.

But wait, you actually overpaid your taxes, and now the IRS has more of your money than you needed to give them. Not to worry, the IRS will pay you back. It just might take some time.

What can you expect when you overpay your taxes?

When you overpay your taxes, the IRS refunds you the overpaid amount once it processes your tax return. As of September 2022, the agency processed more than 140 million tax returns out of the more than 145 million total returns for the year. It has also issued more than 96 million refunds, with an average amount hovering around $3,000.

When will I get my overpaid taxes back?

When you end up overpaying your taxes, the IRS is usually super quick to refund you, as long as you filed an error-free tax return. This is because if the IRS delays your tax return for more than 45 days, it will have to pay additional interest on the overpaid amount.

If you filed your tax return using the IRS e-file system, you'll get your refund in 2-3 weeks. For tax returns filed using the paper method, it's 6-8 weeks and can take up to six months, depending on individual circumstances.

I Didn't get my refund; what should I do?

If the IRS has already processed the majority of overpaid refunds, and you still didn't get yours, there's a good chance there's an issue with your tax filing. If you e-filed, the IRS recommends calling them if you haven't received your tax refund within 21 days after filing your tax return. With paper filing, you'll have to wait six months before you call the IRS.

If the IRS tax refund you received isn't the right amount, or the interest on your refund is less than you expected, you'll have to complete Form 843 and submit it to the IRS. Use line 7 to state why you think the IRS owes you additional interest. The agency will check its records and make a decision.

How can I avoid overpayment on taxes?

If you're a freelancer, independent contractor or self-employed individual, you'll have to calculate your quarterly estimated taxes on your own. To make an accurate estimation, you'll need to organize all your income and business expenses.

You can do this with spreadsheets and saving recipes, or you can download an A.I.-enabled tools like FlyFin to do all of this for you in minutes. You also get 24/7 CPA support to help make sure your tax calculations are as accurate as possible. After all, it's better not to overpay your taxes in the first place than to wait for a refund!