Tweaking the IRS Withholding Amounts

bucks.pngSince the IRS Withholding Calculator is still unavailable as of this writing, I bypassed it and went directly to IRS Notice 1036 (pdf) which is intended to guide employers as to how much to withhold from employee pay. This notice is a typical IRS offering which is both confusing and difficult to understand. I did manage, however, to get the info I needed to proceed with our 2018 withholding “tweaking.”

The financial entity which manages our two pension distributions treats each one as if it were your entire income, thus complicating the final calculation because we actually have several sources of retirement income. Since they are virtually complicating things, I opted out of withholding altogether from the two pensions.

We do, however, have control over the rollover IRA and its exact (to the integer percentage amount) withholding. I figured out what we are paid in each month, cross referenced it to the IRS notice above and determined what we should be sending to the IRS each month.

I have a spreadsheet that I have used in the past for withholding and modified it to determine (to the closest percentage point) what the number should be. I used the “effective tax rate” method based on the numbers I derived to allow me to adjust the withholding from the IRA. This way, I only have one place that I need to be tweaking.

I should have done this last year instead of effectively loaning the .gov interest-free $$$! :(

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The 2017 Tax Returns Filed

taxes.jpgOur Investment Consolidated 1099 forms were finally available today, so since the returns were 99.9% complete, we filed both Arizona and Federal Tax Returns online this afternoon. We were somewhat aggravated that it took so long to officially get the numbers on the proper forms, but now it’s done and we can start waiting for our refunds.

The 2017 withholding rate we used underestimated the effect of upgrading our motorhome for which larger amounts of Vehicle License Fees and 2nd home loan interest would work to our benefit. As a consequence, we overpaid into the Federal and State coffers all year.

Now, we can start to calculate and adjust the amounts to be withheld for the remainder of 2018. We have a spreadsheet that we used in the past to figure the proper withholding and will resort to it again this year. There are a couple of complications involved, however, due to the effects of the GOP Tax Reform and an increase in the IRA distribution.

Our Arizona withholding will be zero this year because we contribute to the Arizona Private Education Scholarship Fund which completely offsets our state income tax obligation. For Federal Tax, we will use an assumed effective tax rate to determine withholding. As an aside, the IRS withholding calculator is not available because of the recent tax reform bill.

Bottom line, we’re glad to have 2017 tax behind us. Now to figure out how to spend the refund!

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Weekend Activities

A Humorous Quilt At the Craft Fair

In a rare departure from our tendency to remain home during winter weekends, we broke with that and went to the Town Library and Civic Center to attend two functions happening simultaneously. It was a very nice spring-like day, so we opted to venture out among ‘em.

In the town auditorium, there was a showing of quilts from a local quilting society where there were hundreds of beautiful items on display. All of them looked that they had a lot of labor hours going into them, some taking the quilter years to complete. Damsel took the photo upper left of me being amused at a quilt commemorating the “Christmas Story” with Ralphie and the Leg Lamp.

The other activity was a craft fair presented by “Friends of the Wickenburg Library.” It was the usual display of art, jewelry, woodwork, soap, pottery and you name it. The displays were on the grounds of the library and it seemed to be well attended, now that the town population is over 20K with our winter visitors here for the beautiful weather.

While we were out, we decided to stop at the supermarket in that part of town and pick up a couple of sale items and some things we missed from shopping on Thursday. We noted that shopping on the weekends seemed to be a competition in that the parking lot and aisles were crowded. We resolved to avoid weekend shopping in the future during the winter season.

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2017 Tax Return (Almost) Complete

irs_logo.pngWe have received all but one tax form from our various sources of income. The last of the 1099’s to arrive (as usual) was the one from the Social Security Administration, the SSA 1099. We had an additional set of 1099 forms this year due to our pension administrators decision to switch financial providers during 2017. Not a big deal, but two additional income sources to input into the tax program.

The last form (1099 B) which we have not yet received deals with investment income; we had a negative capital gain in 2017 when we sold mutual funds to acquire the new RV. I completed the inputs for this event into the tax program, but there are a couple of items I still do not have to finish up the input for the investments section. For that reason, I won’t be able to file the return until about the middle of February. The numbers won’t change, but the missing information is required by the IRS.

I mentioned on the other blog that we would be getting a refund this year. The final calculation shows that to be true. Damn, I hate lending the .gov interest-free money, especially given the amount of the over-payment in 2017. Given the new tax deal from Trump and the GOP, I will have to make some wild guesses as to how much “tuning up” our withholding needs. I am especially anxious to file the returns so we can get our money back ASAP.

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Checking off the Chores

check.pngWe use a calendar application on the home computer to remind us of things we need to do. Even in retirement, there are a myriad of chores (as many retirees already know) that present themselves to be accomplished on a routine basis. The application also reminds us of birthdays, appointments, holidays and anything deemed necessary as a one-time or recurring event.

Wednesdays are filled with things to do:

  • Look at the grocery ads
  • Do the weekend food planning
  • Start and run the engines in the RV and in Damsel’s Convertible

And today, being the fourth Wednesday of the month:

  • Record the SSA deposit in the banking application
  • Pay off the Credit Card

There was an additional chore to do today; fill the RV with diesel (it has been on half tank since our return from the fall excursion). Our grocery chain has a “GAS REWARDS” program where we can get up to a dollar discount per gallon up to 25gal. It so happened that we had enough rewards for fifty gallons of fuel, so I drove the RV to the station that accepts the rewards here in town and pumped in 44 gallons of diesel at a dollar off the advertised price. Paying $1.999/gal is a whole lot better than the last time we fueled up in rip-off Kalifornistan at the $3.559/gal price tag over there.

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An Upside-Down Rainbow

Rainbow Arc

When putting the BBQ grill away in the garage late this afternoon, we noticed a couple of Sun Dogs on either side of the sun. But, when looking almost straight up, we saw the rainbow which is not actually a rainbow at all but a Circumzenithal Arc. I went back into the house and got my camera to photograph the unusual phenomenon. I stood in the shadow of the big saguaro out front to get the photo above.

The weather was very spring-like today with high thin clouds, a light breeze and a high temperature of 72 degrees. No wonder that the snowbirds are here in force. We also currently have rodeo events which brings out lots of participants and observers.

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Cactus Planting Day

Peruvian Apple CactusAfter our usual Monday morning activities were complete, Damsel and I decided it was time to put some of the potted cacti sitting in the side courtyard into the ground. We should have done this a long time ago, since a couple of the cacti had started sending roots into the courtyard ground through the drain holes in the bottom of their pots.

Today’s weather was Arizona perfect for these outdoor chores. It was mostly overcast with the temperature in the high sixties, nearly perfect conditions for digging a hole.

The first cactus to go into the ground is pictured on the right. The label on the pot said it was a “cereus peruvianus montrose,” or, as I learned from the internet, a Montrose Peruvian Apple Cactus. This cactus has been doing well in the courtyard in its pot and has given us numerous flowers typical of night-blooming cereus.

In addition to the cereus, we had three one-gallon pots, each containing a golden barrel cactus. These three were added in the rock slope in front and to the side of the house where we already had planted five other golden barrels a while back.

There are three or four more potted cacti in the courtyard which we didn’t get to today. But, now that the weather is going to be like this or cooler for a while, we will try and get to the others in the weeks ahead. Of course, we probably won’t stop there as the landscaping is an on-going endeavor that we may never finish.

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