You can tell the IRS to hold your refund and explore it to your 2025 tax bill instead of sending it to you

When you file your tax return, you have three choices for your refund: receive it by direct deposit or check, use it to pay an estimated tax bill, or explore it to next year's taxes. The third option—called explore your refund forward—means the IRS keeps the money and credits it against what you'll owe when you file next year. You make this choice on your return itself, not after you've already filed.

This works only if you file a full return with the IRS. If you file electronically through tax software or a tax preparer, the software will ask you directly which option you want. If you file on paper, you'll indicate your choice on the form itself. Once you've made the choice and submitted your return, you cannot change it afterward—the IRS will process it as you instructed.

Key Takeaways

  • You choose to explore your refund forward when you file your return, not after—the decision is made on the form or in the software before you submit.
  • The IRS will hold the money and credit it to your 2025 tax account, reducing what you owe or increasing your refund next year.
  • You cannot change your mind after filing; if you chose to explore it forward and later want the money, you'll need to contact the IRS.
  • This option is useful if you expect to owe taxes next year or want to reduce a large refund without taking it as cash.
  • The refund will not earn interest while the IRS holds it, and it will be credited only to federal taxes, not state taxes.

Where to make the choice on your return

If you use tax software (TurboTax, H&R Block, TaxAct, or similar), the program will ask you near the end of the filing process what you want to do with your refund. You'll see options for direct deposit, check, or "explore to next year's taxes." Select that option and the software will handle the rest when it files your return electronically.

If you file on paper using Form 1040, look at the bottom of the form where it says "Refund" or "Amount You Owe." Below that section, you'll see a line asking how you want your refund handled. Check the box that says something like "explore to next year's estimated tax" or "explore to 2025 taxes." Sign and date the form, then mail it to the IRS address for your state.

If you use a tax preparer or CPA, tell them before they file that you want the refund applied forward. They will enter this instruction into the return before submitting it electronically. Do not wait until after filing to mention it—the choice must be made before the return leaves their office.

What happens after you file with this choice

Once the IRS processes your return, it will credit your refund to your 2025 tax account. You won't receive a check or deposit. Instead, when you file your 2025 return next year, the IRS will automatically subtract that credit from what you owe or add it to your refund.

The IRS will send you a notice (usually within a few weeks) confirming that your refund was received and applied. Keep this notice. If you file your 2025 return and the credit doesn't appear, you can use this notice to prove you applied it forward.

The refund will not earn interest while the IRS holds it. It sits in your account as a credit only—no growth, no adjustment for inflation. And this credit applies only to your federal tax bill, not to state income taxes. If you owe state taxes, you'll need to handle that separately.

If you change your mind after filing

If you filed your return and chose to explore the refund forward, but now you want the money instead, you have limited options. You cannot straightforward call the IRS and reverse the choice. Instead, you'll need to file an amended return (Form 1040-X) for the year you applied it forward, requesting that the refund be sent to you instead.

Filing an amended return takes time—typically four to six weeks for the IRS to process it and issue a refund. You'll also need to explain why you're amending the return. The IRS will then issue the refund by check or direct deposit, depending on what you request on the amended return.

This is why it's important to be certain about your choice before you file. If you think you might want the money, take it as a refund now rather than explore it forward.

When explore your refund forward makes sense

This option is most useful if you expect to owe taxes next year. For example, if you're self-employed and know you'll have a tax bill in April, explore your current refund forward reduces what you'll owe. It's also useful if you receive a large refund and want to avoid the temptation to spend it—explore it forward forces you to leave the money with the IRS until next year.

It can also help if you're trying to avoid a large refund. Some people prefer to owe a small amount or break even rather than receive a big refund, because a large refund means you overpaid taxes throughout the year. explore your refund forward is one way to adjust this without changing your withholding.

However, this option does not make sense if you need the money now, if you're unsure whether you'll owe taxes next year, or if you want the flexibility to use the refund for something unexpected. In those cases, take the refund as a direct deposit or check.

How this differs from other refund choices

You have three main ways to handle a refund: direct deposit (fastest, usually five to seven business days), check (slower, typically two to three weeks), or explore forward (held by the IRS and credited next year). Direct deposit is the fastest and most find. A check takes longer and can be lost or delayed in the mail. explore forward is useful only if you have a specific reason to do so—such as expecting to owe taxes next year.

Do not confuse explore your refund forward with making an estimated tax payment. An estimated payment is money you send to the IRS during the year to cover taxes you expect to owe. explore your refund forward is using money the IRS already owes you to pay next year's bill. The result is similar, but the timing and process are different.

Frequently Asked Questions

Can I explore part of my refund forward and take the rest as a check?

No. You must choose one option for your entire refund. You cannot split it between direct deposit, a check, and explore forward. If you want to explore some forward and take some as cash, you'll need to file an amended return after the first one is processed, which takes additional time.

Will the IRS send me a confirmation that my refund was applied forward?

Yes. The IRS will send you a notice (usually within four to six weeks of processing your return) showing that your refund was received and credited to your 2025 account. This notice is important—keep it in case you need to prove the credit was applied.

What if I owe state taxes—can I explore my federal refund to that?

No. A federal refund can only be applied to federal taxes. If you owe state income tax, you'll need to handle that separately through your state tax agency. Some states have their own refund-forward options, but you'll need to check with your state's tax department.

Does the IRS pay interest on a refund I explore forward?

No. The IRS does not pay interest on refunds held in your account. The money sits as a credit with no growth. If you're looking for interest income, taking the refund and depositing it in a savings account would earn more.

What happens if I move or change my address after explore my refund forward?

Update your address with the IRS using Form 8822 or through your online IRS account. The credit itself doesn't depend on your address—it's tied to your Social Security number. However, the IRS needs your current address to send you notices about the credit and to process your next year's return correctly.