Question

What is a disadvantage of overpaying your taxes during the year?


Your refund will be delayed until after tax season the following year.


You cannot use the money or draw interest on it until after you get your tax refund.


You avoid getting audited, but your refund is significantly lower.


You cannot apply the extra amount paid to the next year’s taxes.

Answer 1

The disadvantage of overpaying your taxes during the year is that you cannot use the money or draw interest on it until after you get your tax refund.

If you are overpaying your taxes, the government is holding that extra money for you. At the end of the tax year when you file your taxes, they will give you the extra money back that you overpaid.

However, you don't receive any interest on the extra money that was held.