Money and Business

UPDATE: [01/30/26] This time it took only 4 days for the Federal Refund deposit to hit the bank account. That’s not the 3 day record, but pretty close.

After a couple of months waiting on the desktop tax prep software and the IRS to get their forms finalized and released (which is usual for every tax year) and also waiting for the release date for the last of our investment 1099 forms, we were able to put the numbers into the program today to finalize and send the 2025 Federal tax return to the IRS.

It so happens that our investment brokerage released our last 1099 form today which coincides with the first day that the IRS will accept 2025 returns on-line. We literally are filing on the earliest date possible given the completion of all necessary documents having been received and the IRS opening up the gate.

As is usually the case, we organized our income and other important items into a spreadsheet which allows us to forecast our impending tax situation with surprising accuracy. This year, thanks to the One Big Beautiful Bill and the Senior Deduction Bonus, we took the impetus to manage the withholding during the latter part of the tax year such that we nearly broke even with what we owe versus what we withheld. I’m proud to say that our refund this year will be substantially less than $100.00. The bonus was nice, but we still feel that Social Security should be tax exempt, if not all seniors income should be exempt, but that’s another fight for another day.

So, in conclusion, we’re waiting for our pittance refund in a couple of weeks and not depending on it to be a windfall of any kind – we don’t need to do that, thank God. We have already started modeling our 2026 tax year in another spreadsheet and hope to stay on top of it for the coming tax year. I have already adjusted the withholding such that we expect to come close to breaking even again in a year.

Keep safe, keep warm and God Bless!

Addendum: I didn’t mention the Arizona Tax Return above, mainly for the reason that we don’t pay any state income tax. In AZ, if you contribute to schools (public or private), you get a dollar-for-dollar reduction of the 2.5% state income tax assessed against the state Adjusted Gross Income, which is much less than the Feds. Since we contribute a significant amount to our local parochial school, we always come out with out having AZ tax. Still, the return must be filed. So, since our tax program wants to charge us $25 to file electronically, we will do it the snail mail way as soon as the AZ forms in the software are available – we have until April, just like the Fed deadline.

UPDATE: [02/05/25] This time it took a week for the Federal Refund deposit to the bank account. That’s not the record, but pretty quick nonetheless.

UPDATE: [01/29/25] Both State and Federal have been submitted and accepted. The clock is now ticking to see how soon the Federal Refund will be posted to the bank account. The record is three days.

We have had the 2024 tax program installed since last November, and have been inputting information since then, but today is the first time that we have run through all the preliminary data prior to getting the last of the IRS 1099 forms from our various Government and financial institutions.

I have put together a spreadsheet for each tax year which does many of the major calculations for the tax year with educated guesses and actual numbers. The form has several functions including a calculator for our Required Minimum Distribution (RMD) from the retirement savings. That particular function, each year, establishes the RMD as soon as I input the year end savings balance and the age factors, which are used to calculate the actual RMD amount. That way, I can set up the periodic withdrawals to be made for the year which usually amount to within pennies of the required amount. We’ve already received the January withdrawal.

As I have said in earlier posts about this topic, I like to set things up such that the amount in the refund or amount owed are a small value. I don’t like loaning the government interest-free money. This year, it appears, we will be getting a refund a little further away from zero than we would prefer. We did the withholding based on the expected standard deduction and our effective tax rate from last year, but the IRS increased the standard deduction figure which displaced us a bit from the target we set. Oh well, we will do the usual and place the refund in long-term savings investment.

So, now all we have to do is wait for the last of the expected 1099s to become available on or about the 29th of this month (January), and run the missing numbers for which approximations have been used thus far. Then, we will e-file the returns at the end of January or the beginning of February.