Some states don't accept a negative number on a return, which can mean losing tax paid on orders that are later refunded when the refund exceeds the tax owed to the state. To address this, our team established the Refund Carryover system (also referred to as Credit Carry). When refunds in a jurisdiction are greater than sales for a given period, we report $0 for that jurisdiction and carry the remaining amount forward as a credit.
A Refund Carryover ensures the tax associated with those refunds is still accounted for on your returns, even when the state won't accept a negative number. This article explains when a Refund Carryover happens, how we apply it, and where to see it in your dashboard.
Note: This resource currently covers US jurisdictions only. For questions about credits or overpayments in other globally supported jurisdictions, contact our team through the messaging widget in your dashboard.
When a Refund Carryover happens
When you refund an order, that refund lowers the sales you report for the period. Some states don't accept a negative amount on a return, though. If your refunds in a jurisdiction are bigger than your sales there for a filing period, we report $0 for that jurisdiction and carry the extra refund amount forward.
š¢ We apply your Refund Carryover automatically the next time you have sales in that jurisdiction, and it doesn't expire. You don't need to request anything.
š” Here's an example of how it works ā
Original filing period ā | What we report ā | Next filing period ā |
You have $1,000 in sales in a jurisdiction during a filing period.
You refund $1,500 in orders there in the same period.
Your refunds are $500 more than your sales, and the state won't take a negative number. | We report $0 for that jurisdiction and carry the $500 forward. | The next time you have sales there, we subtract the $500, which lowers your taxable sales and the tax you owe for that period.
This ensures you donāt pay tax out of pocket on orders that were later refunded. |
Without a Refund Carryover, you'd end up paying tax on sales you've already refunded to your customers.
Where to see your Refund Carryover
Open the filing in your dashboard.
Click Export Transactions.
Open the Unapplied Refunds sheet in the export.
Any Refund Carryover that's waiting to be applied is listed there. If there's no Unapplied Refunds sheet, nothing is being carried forward for that filing.
FAQs
Is a Refund Carryover money the state is holding for me?
Is a Refund Carryover money the state is holding for me?
No. A Refund Carryover comes from your own refund activity. The state isn't holding money for you, and it isn't a balance you can withdraw or use to pay a filing. If the state is showing a credit or negative balance on your tax account, that's a state tax account credit, which works differently.
Does a Refund Carryover change how much tax I pay overall?
Does a Refund Carryover change how much tax I pay overall?
No. It only changes which filing period your refunds are counted in. The refunds still lower your tax. They're counted in a later period instead of the one where you issued them.
Do I need to do anything when I issue a large refund?
Do I need to do anything when I issue a large refund?
No. Keep processing refunds as you normally do in your sales platform. We track them by jurisdiction and carry anything extra forward for you.
š¬ Questions? Reach out to our team anytime via the messaging widget in your Numeral dashboard.