Additional Payments or Taxes that You May Have Paid

When preparing your 2026 tax return (filed in 2027), it's easy to focus on income and miss tax payments or deductions that could affect your refund or balance due. This article covers some common tax payments, withholding amounts, and deductions that taxpayers often overlook.

Taking a few minutes to review these items can help ensure your return is complete and accurate.

Payments

Federal Estimated Tax Payments

Federal estimated tax payments are payments you send directly to the IRS during the year. These payments are most common if:

• You're self-employed or earn income that doesn't have taxes withheld automatically.
• You owed taxes on a prior-year return because not enough federal tax was withheld from your income.

Estimated tax payments are typically made quarterly. Since most employees have federal taxes withheld from each paycheck, many taxpayers do not need to make these payments.

State Estimated Tax Payments

Some states also require or allow estimated tax payments. Like federal estimates, these payments are generally made by people with self-employment income, investment income, or other income that may not have tax withholding.

If you made estimated payments to your state during 2026, be sure to include them on your tax return.

Other Federal Tax Withholding

You may have federal tax withholding reported on forms other than a Form W-2. If so, make sure that withholding is entered on your return.

Common examples include:

• Form 1099-B, Box 4
• Form 1099-MISC, Box 4

Entering these amounts ensures you receive credit for taxes already paid.

Other State Tax Withholding

You may also have state tax withholding reported on forms that are not already included elsewhere in your return. While this situation is less common, it is important to report any additional state withholding so you receive the proper credit.

To enter estimated payments or additional withholding in the program:

1. Go to Federal
2. Select Payments and Estimates
3. Choose the appropriate payment or withholding section

Prior-Year Fourth Quarter Estimated Tax Payment

Sometimes taxpayers make a fourth-quarter estimated payment in January of the following year.

For example, a payment made in January 2027 for the 2026 tax year should generally be claimed on your 2026 return. Be sure to include these payments if they were intended as estimated tax payments for the prior tax year.

Amount Paid With an Extension

If you requested an extension of time to file your return, you may have sent a payment with that extension request.

Any amount you paid when filing the extension should be entered on your tax return. This payment can reduce the tax you owe or increase your refund, depending on your overall tax situation.

Taxes

Sales Tax Deduction

Taxpayers who itemize deductions can choose to deduct either:

• State and local income taxes, or
• State and local sales taxes

You cannot claim both.

For most taxpayers, deducting state and local income taxes provides the larger benefit. However, a sales tax deduction may be more valuable if you made a major purchase during the year, such as:

• A vehicle
• A boat
• A mobile home
• Other large purchases subject to significant sales tax

Our software automatically calculates your state and local income tax deduction based on the information you've entered. If you believe the sales tax deduction may be more beneficial, you can enter your sales tax information and compare the results.

To enter sales tax information:

1. Go to Federal
2. Select Deductions
3. Choose Select My Forms
4. Open Itemized Deductions
5. Select Taxes You Paid
6. Open the Sales Tax Worksheet

Foreign Taxes Paid

If you paid income tax to a foreign country, you may be eligible to claim either:

• A foreign tax credit, or
• An itemized deduction for foreign taxes paid

In many cases, the foreign tax credit provides a greater tax benefit because it directly reduces your tax liability.

Generally, foreign taxes qualify if:

• The tax was imposed on you.
• You paid or accrued the tax.
• The tax represents a legal and actual foreign tax liability.
• The tax is an income tax or a tax paid in place of an income tax.

To enter the Foreign Tax Credit:

1. Go to Federal
2. Select Deductions
3. Choose Select My Forms
4. Open Credits
5. Select Foreign Tax Credit