CP45 Notice
The CP45 is an IRS notice informing you that the IRS was unable to apply your overpayment to your estimated taxes for the next year as you requested on your return.
Why Did You Receive This Notice?
You received a CP45 because on your tax return you elected to apply your overpayment as a credit toward next year's estimated taxes, but the IRS was unable to process that election. This can happen if you also had a balance applied to another debt via the Treasury Offset Program, if there was an IRS processing issue, or if the overpayment amount changed after your return was reviewed.
What Does this Mean for You?
The CP45 means the IRS could not honor your request to apply your refund to next year's estimated taxes. Instead, the IRS is issuing you a refund for the overpayment amount. You should expect to receive a check or direct deposit, and you will need to make your estimated tax payments separately for the upcoming tax year.
What Happens If You Ignore It?
Your Options
- Accept the refund: If you are fine receiving the refund rather than applying it to estimated taxes, no action is needed.
- Make estimated tax payments separately: Since your overpayment is being refunded, plan to make estimated quarterly payments for the upcoming year to avoid underpayment penalties.
- Contact the IRS: If you strongly prefer to have the credit applied to estimated taxes and believe the IRS made an error, you can call the number on the notice to inquire.
Step-By-Step: What To Do Next
Step 1: Read the CP45 and confirm the refund amount being issued.
Step 2: Update your estimated tax payment plan for the upcoming year — since your credit was not applied, you'll need to make estimated payments independently.
Step 3: Review the IRS underpayment penalty rules (Form 2210) to determine how much you need to pay each quarter.
Step 4: Set up estimated tax payments at irs.gov using the Electronic Federal Tax Payment System (EFTPS)
Step 5: Watch for your refund to arrive within 4–6 weeks.
Can You Handle this Yourself?
The CP45 is easy to handle on your own. The main action item is making sure you plan for estimated tax payments for the upcoming year, since the credit you intended to carry forward won't be there. Use the IRS EFTPS system at eftps.gov to schedule quarterly estimated payments.
Expert Insight From Rockwater Tax
At Rockwater Tax, we make sure clients who receive CP45 notices don't get caught off guard with an underpayment penalty at year-end. When you expected a large estimated credit and it doesn't show up, your quarterly payment obligations for the new year need to be revisited. Set a calendar reminder to pay estimated taxes on the standard quarterly dates: April 15, June 15, September 15, and January 15.
Need a hand?
FAQ
Q: Will I still get my refund even though I asked to apply it to next year's taxes?
A: Yes. The CP45 is notifying you that the IRS could not apply the credit as requested and is instead issuing a refund.
Q: Do I need to make estimated tax payments now that the credit won't be applied?
A: Yes, if you are required to pay estimated taxes. Since the credit won't be there, budget for quarterly payments to avoid underpayment penalties.
Q: Why couldn't the IRS apply my overpayment as I requested?
A: Common reasons include a Treasury offset that reduced the available overpayment, an IRS processing error, or a change in your return that affected the overpayment amount.
