Money and Business

Almost Done! – 2021 Tax Return

UPDATE: Filed 01/26/2022

I used strikeout tags above on the “Almost” in the title because we’re now filed and waiting for the refund.

UPDATE 2: Refund deposited 02/03/2022

This is the fastest we have ever seen a refund deposited. It took the IRS only eight out of the advertised 21 days to deposit our refund. Last year, we similarly filed our return in late January and it took the IRS 23 days before the refund showed up.


The current tax season will soon be over for us since we are completely done with everything except for one consolidated 1099 form from our brokerage; this investment account is always last for some reason, but it has previously been in our (electronic) possession before January is over. We’re expecting it to be available next week. We get a handful of 1099s from several sources including IRA RMD, SSA, pensions and financial institutions. Everything is already input to this year’s tax program except for the one mentioned above.

When the IRS changed the standard deduction under President Trump to be greater than our usual itemized deductions, it made our return so much easier to manage, given our financial particulars. We almost used to be like the dude in the photo on the left, but now we’re relieved of all that tedium under the revised standard deduction. We were happy to see that the current administration left things intact (albeit futzing around with other IRS functions). After we receive that last 1099 form, we will then be just a few clicks away from filing. This year, we are happy to say, that we analyzed our tax situation early and managed our withholding such that we will be receiving a small refund (<1K) from the Feds and, because of our charitable support for Arizona Private Education, we will be paying no state income tax at all.

Started the Annual IRS Ritual Today

I usually make it a point to acquire the Tax Software when Black Friday rolls around. This year was no exception and, since it is already the first of December, I roughed out the first cut of the 2021 return for the Fed (the Arizona package has yet to be released). I do this advanced cut each year to check if we have any unexpected issues that need to be fixed. At first glance, it appears that we do not have that need.

For the past several years, I have modeled our income and withholding on a spreadsheet to determine how much we must withhold for the Fed. So far, it has worked out to get us into a position where we only contribute minimally to the Fed and get a small (usually less than $1k) refund. We hate loaning the .gov interest free money.

I have updated the spreadsheet for 2022 already, since we now know the amount of SSA income for both of us. They allowed a 5.9% cost-of-living increase, but at the same time upped the Medicare Part B premium by 14.5%. The forecast for next year will put us in roughly the same bracket for 2021. Some items are guesses, but the major income sources (pension, SSA, IRA RMD) are well known.

We don’t pay any State Income Tax because we participate in a program to contribute to our local private Christian school which offsets us dollar-for-dollar on what would have been our State Tax obligation. We get the same kickback when we donate to the local high school’s Rifle Team! A bonus is that we still can claim each donation as a 501(c)(3) deduction on the Fed Tax.

We should again be able to file with the IRS in late January, as we did for last year’s return. The last and slowest of the 1099 forms from our investments are usually in our possession by then.

2020 IRS Returns in Progress

ir.pngBecause the tax program we use was a little tardy in getting all the appropriate updates (and some are still not ready) we are getting a later start than usual on the preparation of our annual tax returns. We know most of the numbers such that we can input them to the tax program to get a fairly close approximation of the actual bottom line for the tax year. According to early results, we seem to be getting a larger chunk of change than originally forecast for a couple of reasons; first, the entirety of the .gov “COVID Stimulus” went to charitable organizations which was above and beyond and in addition to our normal 501(c)(3) contributions. The second reason for the larger rebate is we decided to itemize some deductions that were to occur in 2021 by paying them in 2020. That got us to where our itemized deductions exceeded the generous standard deduction introduced by the Trump administration by a couple of thousand dollars which resulted in several more hundred dollars coming back to us.

Meanwhile, we’re waiting on the various income source institutions to provide the 1099’s that show the actual numbers which ought to be pretty close to those we already have put into the tax program since I have a spreadsheet for the purpose of tracking and estimation of the final numbers. So, we’re waiting patiently for the paperwork from the IRA, the pensions, the SSA and our financial intuitions to show up. I expect to be e-filed before the end of January for both State and Federal Returns which should result in our refund within a couple of weeks afterwards (if the irs.gov has their feces together, that is).

And, yes – I have already throttled back the Fed withholding for 2021 in hopes that we might break even next time or owe them a little bit. I hate lending the .gov interest-free money.

Tax Returns E-Filed Today

irs_logo.pngEarlier than anticipated, the last important 1099 document became available today. I expected at least two more weeks before the investment consolidated 1099 would be available. But, since I reported being 99 percent complete on the 17th of this month, it was a mere few mouse clicks to validate the latest documented information and file the returns, both AZ and FED. The 2019 Tax Season is done except for a small refund from the IRS which (according to the IRS) will be e-deposited within a week or two.

For 2020, we will continue to track our expenses with the assumption that we may use itemized deductions rather than the standard deduction which was the case for the 2019 return. We may not ever file using itemization again, but we will track expenses as though we were going to. We will also continue with our contributions to charities that we see fit to support, particularly those that support Veterans, the Second Amendment, Christianity and Canine Rescue (among others not mentioned here).

Speaking of tracking expenses, I have been using Quicken for a long time. So long, in fact, that the file size of my records going back for the last twenty years has somehow exceeded the programs data storage capability. The symptom is that I get corrupted data when I start the program and have to load in a backup record to make it behave correctly. It is a bit tedious in that I have to make a backup of the data on a daily basis and restore the backup the next time I use the program. The gurus at Quicken say there isn’t a practical limit on record sizes, but I believe there is a declaration somewhere in their code that screws up my very lengthy financial data records.

As soon as I can get to it, I am going to start a new Quicken File with the first of this year as the starting date. It will be easy to update recent (January ’20) data, since the program can download it directly from our financial institutions. I will keep the old file on hand since I find it handy to look back in the registers from time to time. There are a lot of important things logged into the old data which I would hate to permanently lose.

2019 IRS Return 99% Complete

taxes.jpgAs of today, I can say that the 2019 returns are about complete. All we’re waiting for is the final 1099s from investments, retirement, etc. One such investment 1099 won’t be available until the second week in February, so we will have to wait another month for that little (very minor) tidbit of fiscal information.

Looking at the bottom line, i.e. the cash back or balance due, it seems that we planned pretty well in 2019 and the resulting difference is a relatively small amount in our favor. We used a predicted tax rate based on past experience and forecast that value for 2019 in our “Withholding Planning” spreadsheet. We adjusted the rate of withholding according to the results of the spreadsheet and it worked out to a difference to within a few hundred dollars from breaking even. I love it when a plan comes together.

This year is the first year that we have taken the standard deduction rather than itemizing. We went through the deductions exercise to see if we could surpass the new $27000 (married filing jointly) Standard amount, but the total of all our deductible fees, charity, mortgage interest, medical premiums and other miscellaneous items did not surpass the Standard. That actually makes it easier for us if we can depend on claiming the SD in the future, but we will track the deduction numbers just in case.

Tax year 2020 will be a bit different from the past since the Damsel will become eligible for some SSA income. We have that factoid programmed into the 2020 version of the spreadsheet to account for the difference. The delta from adding her income will be conveniently offset by a reduction in my draw from the IRA to retain about the same level as before with an appropriate cost-of-living increase of course.

Now awaiting the forms so we can claim our paltry refund. 🙂

A New Tax Season Is Almost Upon Us

irs_logo.pngDue to an upcoming change in income status, we started to review our 2019 and 2020 Income Tax situation. It seems that Damsel will now begin getting back some of her hard-earned money that the .gov stole from her while she was working. I know, there are laws that congress passed that made the removal of money from our earnings “legal” under the Social Security Act or whatever. Still, we as individuals would be better off if we had access to those funds to properly invest and not have them deferred for some of the ridiculous spending by congress. It is tantamount to theft in our opinion.

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OK – now that I have that out of my system, I can expound on the tax prep thing. It seems that if we have Damsel’s SSA distributions coming into the household, I have to make adjustments to some things, like withholding and IRA distribution rate. This is to be done in order to attempt to keep us in the current tax brackets and such.

Since the new income will start later this year, I had to analyze whether it would be prudent to make adjustments to those things I mentioned above. Fortunately, for this tax year, that won’t be necessary. It may cause us to owe a little more for 2019, but, as I have said before, we would rather owe a bit than loan the .gov interest free money.

Because of our retirement lifestyle, we set our income rate to accommodate our established needs. Now, because of the increase in available funds, I can reduce the IRA withdrawal rate to the RMD (required minimum distribution) as set by the IRS for retirement accounts. This is a good thing thus preserving those funds for the future while they multiply in our IRA investment pool.

So, until I see some of the exact numbers forthcoming, I have set up a spreadsheet with preliminary numbers to analyze our 2020 income and withholding situation. At first glance, it looks like we’re going to be getting our 2020 tax situation under control. We will fine tune things as soon as the actual numbers can be seen.