This is probably a stupid question but I don’t really understand taxes very well (I live in Oregon, USA). I messed up my W-2 for 2025 when I got a new job out of college and put exempt from withholding so now I owe 3k in taxes. I fixed it so now I do have withholding being taken out of my paychecks.
Does the withholding from my upcoming paychecks this year apply to the taxes I owe from 2025? i.e. will the total balance that I owe automatically lower as I receive new paychecks that withhold tax? Or do I need to manually go into the IRS portal to pay it off via direct deposit for it to count towards my outstanding taxes?
I’m on a payment plan for the taxes I owe so I already have $100 being paid to the IRS every month as well. Thanks!
Will the withholding from my 2026 paychecks apply to the taxes I owe from 2025?
byu/lamentist intax
Posted by lamentist
4 Comments
No. You need to pay whatever you owe for 2025.
No. Withholding is basically an estimated prepayment towards your current year tax bill. If you end up overpaying and getting a refund, the refund will be applied to your prior year balance.
Basic Tax Course in a nut shell….
A tax return is just a form with a series of math calculations, and the return is broken down into roughly four parts:
– How much income did you have?
– How much of that income do you have to pay tax on?
– How much is the tax?
– Did you pay in enough to cover that tax?
Think of it as shopping. You are buying your income. That income has a price (the tax). The more you buy, the more it costs. You give the cashier (government) a little money (withholding from your check) each time you put another item (paycheck) in the cart. At the end of the year, you add up everything you bought (total income) and see what it costs (total tax). Then, you total up the payments you made (withholding from checks). If the amount you paid is more than the bill, you get your change (tax refund). If you did not pay enough during the year, you owe when you check out (file the return).
Some people have coupons (deductions) and gift cards (credits) they can use to make the bill lower or even pay the bill. A deduction is like a sale coupon (Spend $150 and get 10% off). A credit is like a gift card (it can be used to pay the actual bill). Sometimes the gift cards are enough to cover the whole bill. If that’s the case, then you don’t have to use your own money (withholding) so it is refunded to you.
Your withholding for 2026 will first be applied towards the tax you owe for 2026. If you wind up having paid in more than you needed for 2026, then the excess, which would normally be issued to you as a refund, will be applied towards your debt from 2025. But that doesn’t get determined until you file your 2026 return next year, so the effective date, the date that gets credited as paid towards your 2025 debt, will be the date you filed your 2026 return, resulting in interest & late payment penalties continuing to accrue in the meantime. So, you don’t want to pay your 2025 debt via 2026 withholding; you should make payments separately via the IRS website.
Also, once you have paid the whole amount off, I suggest calling the IRS to confirm that and to make sure they stop the automatic monthly payment. Otherwise, it doesn’t always get turned off right away, and you wind up overpaying one or two months and having to wait for the IRS to realize that and refund you that overpayment.
No.