The IRS is asking whether to send your refund now or hold it for next year's taxes
When you see this question on your tax return or in your IRS account, the IRS is offering you a choice: take your refund as money back now, or let them keep it and apply it automatically to your 2025 tax bill when you file next year. Most people choose to take the refund now. Choosing to apply it forward means the IRS holds your money interest-free for months and reduces what you owe next April instead of paying you today.
This option appears on Form 1040 (line 33c for federal returns) and sometimes in state tax software. It also shows up in your IRS online account under "View Your Tax Account" if you filed electronically. The choice is yours to make, and there is no penalty either way — but the timing and what happens to your money are very different.
Key Takeaways
- Applying your refund to next year means the IRS holds your money and uses it to pay part of your 2025 tax bill instead of sending it to you now.
- You make this choice on Form 1040 line 33c when you file, or you can change it in your IRS account after filing if you filed electronically.
- Taking your refund now is the standard option and gets money to your bank account or by check within one to three weeks of acceptance.
- Applying it forward makes sense only if you expect to owe taxes next year and want to reduce that bill without having to write a check in April.
- If you change your mind after filing, you can request the refund be sent to you instead, though the process takes longer than a normal refund.
When you might choose to apply your refund forward
The main reason to apply your refund to next year is if you know you will owe taxes when you file in 2025. This happens when you have self-employment income, investment income, or a side job where no taxes were withheld. Instead of getting a refund check now and then owing money in April, you can let the IRS use your current refund to pay down next year's bill.
This also works if you are trying to avoid a large tax payment next April. For example, if you are self-employed and expect to owe $3,000 next year, and you are getting a $2,500 refund this year, applying it forward reduces your April payment to $500. You do not earn interest on the money while the IRS holds it, but you avoid the stress of a big payment due date.
Some people use this strategy to manage cash flow — they know they will need the money in April anyway, so they let the IRS hold it rather than deposit it and then withdraw it later. This is a personal choice and depends on your situation.
How to choose this option when you file
If you are filing a paper Form 1040, look for line 33c. It asks whether you want your refund sent to you or applied to your 2025 estimated tax. Check the box for "Apply to your 2025 estimated tax" if you want to hold the refund. Sign and date the form as usual and mail it to the IRS address for your state.
If you are using tax software (TurboTax, H&R Block, TaxAct, or others), the software will ask this question during the refund section. You will see language like "Apply refund to next year's taxes" with a yes or no option. Choose yes if you want to apply it forward. The software will fill in line 33c automatically when it generates your Form 1040.
If you file electronically and change your mind later, you can log into your IRS account at IRS.gov and request the refund be sent to you instead. This takes longer than a normal refund — usually four to eight weeks — because the IRS has to process a refund reversal.
What happens to your money if you apply it forward
The IRS deposits your refund into an account and holds it until you file your 2025 return. When you file next year, the IRS automatically applies that money to your tax bill for that year. You do not have to do anything — it happens on its own when your 2025 return is processed.
If your 2025 tax bill is smaller than the amount you applied forward, the IRS will refund you the difference. For example, if you applied $2,500 forward but only owe $1,800 in 2025, you will get a $700 refund next year. If you owe more than the amount applied forward, you will owe the difference when you file.
The money earns no interest while the IRS holds it. This is one reason many people choose to take their refund now instead — they could deposit it in a savings account and earn a small amount of interest over the months until April.
Changing your mind after you file
If you filed your return and chose to apply your refund forward, but now you want the money sent to you instead, you can request a reversal. Log into your IRS account at IRS.gov, go to "View Your Tax Account," and look for the option to change your refund election. You can also call the IRS at 1-800-829-1040 and ask them to send your refund instead of applying it forward.
Processing a reversal takes longer than a normal refund. The IRS typically takes four to eight weeks to send you the money after you request the change. You will receive it by direct deposit (if you provided banking information) or by check mailed to your address on file.
Do not wait too long to request this change. The closer you get to April of the next year, the less time the IRS has to process the reversal before they apply the money to your new return. If you file your 2025 return before the reversal is complete, the IRS will apply the money as originally intended.
The difference between applying forward and making an estimated tax payment
Applying your refund forward is not the same as making an estimated tax payment. An estimated tax payment is money you send to the IRS during the year (usually in quarterly installments) to cover taxes you expect to owe. Applying your refund forward is a one-time choice to let the IRS use money you already have coming back to you.
If you are self-employed or have other income without withholding, you may need to make estimated tax payments throughout 2025 in addition to applying your current refund forward. The refund covers part of next year's bill, but estimated payments cover the rest as you earn the income.
State tax refunds and this option
This option is a federal choice only. Your state tax return has its own refund process, and most states do not offer the option to apply your state refund forward to next year. You will receive your state refund separately, usually by check or direct deposit within two to four weeks of your state accepting your return.
Some states have their own estimated tax payment systems if you expect to owe state taxes next year, but these are separate from your federal choice. Check your state tax agency's website to see what options are available for your state.
Frequently Asked Questions
If I apply my refund forward, when does the IRS use it?
The IRS applies it when your 2025 tax return is processed, which happens after you file in early 2025. You do not have to do anything — it is automatic. If you owe less than the amount applied forward, you get the difference back as a refund next year.
Can I apply part of my refund forward and take the rest now?
No. The IRS option is all or nothing — you either apply your entire refund forward or take the entire refund. You cannot split it. If you want to keep some money now and use some for next year's taxes, you would need to take the full refund now and then make an estimated tax payment instead.
What if I do not end up owing taxes next year?
If you file your 2025 return and do not owe any taxes, the IRS will refund the money you applied forward. This refund is processed like any other and takes one to three weeks to reach you by direct deposit or check.
Does applying my refund forward affect my refund status or timeline?
No. Your refund is accepted and processed on the same timeline whether you take it now or apply it forward. The only difference is where the money goes — to you immediately, or to the IRS to hold until next year.
Can I change my choice if I filed electronically?
Yes. Log into your IRS account at IRS.gov and request the change, or call 1-800-829-1040. The reversal takes four to eight weeks to process. If you filed a paper return, call the IRS to request the change.