What This Notice Means
CP45 says the IRS couldn't apply your overpayment to next year's estimated taxes the way you asked on your return. Some or all of the credit you expected to start the year with isn't there.
The notice explains why and may include next steps. It is also your confirmation of how the IRS actually applied the overpayment. You won't get another notice confirming it.
Why This Matters
If you planned your estimated payments assuming the overpayment would cover part of this year's tax, you may now be short. That can lead to an underpayment of estimated tax penalty when you file next year.
What to Do
- Read the notice carefully to see why the overpayment couldn't be applied and where it went instead.
- Update your own copy of the tax return for your records.
- Recalculate your estimated tax for the current year and adjust your payments so you don't underpay. Use Form 1040-ES and Publication 505.
- If you owe a remaining balance, explore your payment options, including a payment plan.
Not sure what changed? Call the number on your notice. The IRS can explain what happened with your return.
Overpayment vs. Refund
An overpayment means you paid more tax than you owed during the year, through withholding or estimated payments. You can choose to have it refunded or applied to the next year. CP45 means that choice didn't work out as requested.
Check Your Account
Use your IRS Online Account to see which payments are posted to the current year. Make sure what you're counting on is actually there before the next estimated payment is due.
If You Already Got Hit
If you end up underpaying because of this, Form 2210 is where the estimated tax penalty is figured. Keep the CP45 with your records.
If a CP45 left your estimated payments short, call us at (813) 229-7100.