If I have enough overpayment credit to cover this years (2026) CA state tax, do I simply not make any estimated tax payments and CA FTB will automatically draw from my credit? Thank you.
Short answer, no, I wouldn’t rely on that happening automatically.
CA FTB doesn’t just “apply” prior overpayments to current estimates unless you specifically elect it that way when you file. Even then, it’s tied to how it was reported on that return, not something they dynamically pull from whenever they want.
If you’ve got a carryforward credit, it can cover current year liability, but estimated payments are still technically based on safe harbor rules. Skipping them completely can create underpayment penalties even if you end up covered at the end.
What I usually tell people is either:
make the estimates and keep it clean, or
be very sure your prior credit + safe harbor covers you before skipping
FTB is a lot less forgiving on that than people expect.
Do you know if your prior year return actually elected the overpayment to be applied forward?
GoatEatingTroll on
CA treats PTET credits on line 43/44 as a special credit, not as a payment. So while it does reduce your tax liability, it does not count as a timely made estimate.
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Short answer, no, I wouldn’t rely on that happening automatically.
CA FTB doesn’t just “apply” prior overpayments to current estimates unless you specifically elect it that way when you file. Even then, it’s tied to how it was reported on that return, not something they dynamically pull from whenever they want.
If you’ve got a carryforward credit, it can cover current year liability, but estimated payments are still technically based on safe harbor rules. Skipping them completely can create underpayment penalties even if you end up covered at the end.
What I usually tell people is either:
make the estimates and keep it clean, or
be very sure your prior credit + safe harbor covers you before skipping
FTB is a lot less forgiving on that than people expect.
Do you know if your prior year return actually elected the overpayment to be applied forward?
CA treats PTET credits on line 43/44 as a special credit, not as a payment. So while it does reduce your tax liability, it does not count as a timely made estimate.