My State Refunded My First Qtr Tax Payment

[Deleted]

My husband and I just returned from a trip and found a $1,397.82 refund check from the State of CA. According to the company paid CPAs who did our 2012 taxes we owed the State of CA $1989 for under payment of taxes along with a little bit of interest. Interest was calculated through July.

I suspect that CA misapplied our 1st Qtr Estimated Tax payment of $1265 to our 2012 return. That plus a little bit of interest overpayment could account for the refund check. I will call the State tomorrow but am concerned we're going to get hit with a penalty for no 1st Qter tax payment.

Any suggestions of how to handle?

Many thanks for your help!

[mwcpa]

In all likelihood California will send a notice of the "adjustment" they made to what you expected.

If you believe the $1,265.00 was misapplied (I assume you meant 1q2013 in your facts) do not cash the check for $1,387.82.  To me though the $1,387.82 does not appear to be only the $1,265.00.  While states do add "interest" for tax overpayments they would not add that much so quickly on an original filing, even if the refund was delayed by them.... if that was the case I would happily overpay tax to California knowing I would get better than 10% on my money....

Tax refund "due" date 4-15-13.... refund received before 6-30-13.... 2 1/2 months maximum.... interest = 122.82.... on 1,265 over a year that is 10%.... over 2 1/2 months WOW.... no wonder California is often in trouble.... as this does not seem realistic, more is involved... wait for the written explanation before you take further action (the check may have other data enclosed)...

[Deleted]

Hi MWcpa and thanks for your response.

The interest to which I'm referring would be for the underpayment of of the 2012 tax liability. You may recall that DH and I relocated back to the US from Germany last year. Due to the company for which DH worked for not sending out the corrected W2s until April 1, the company paid CPAs were unable to complete the tax returns in a timely manner and filed extensions. They finally filed the returns about June 5th. Their payment calculations of 1989 included interest through July however I was able to pay via the State's electronic payment system and may have saved a couple of months of interest. Hopefully that makes more sense.

[mwcpa]

I would wait for a "letter" from cali... they should send an explanation....

[Deleted]

I called them. They did refund my 1st Qtr return. They had the usual list of excuses, bottom line someone misapplied the 1st Qtr payment.

They will be sending a letter which should arrive in 7-10 days. I'm supposed to send the check back and supposedly the letter will give me a box to check which directs them to apply the payment to my 2013 1st Qtr taxes. No penalties for not having the 1st Qtr taxes posted in time.

[mwcpa]

Great.....

Be sure to "reply" by clearly voiding the check you gave them and returning it.
Draft a cover letter to explain the facts.
and send it by certified mail with a return receipt requested. 

It can take a number of weeks to be corrected.