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.
