There's Death and Then There's . . Taxes!

[finnime]

Taxes. I'm doing my annual procrastination but this time it will be complicated. We will owe, we always do because (I'm going to make many of you blanch) we don't pay taxes during the year lately. I know I'll want to change that, and I will. But income for the past few years has been like exploding popcorn, almost random and not predictable.

Last year we lived for 4 months in Maryland, 2 months staying with a friend in Virginia, then not quite 6 months in Massachusetts. That's messy enough. We paid off one mortgage and picked up another.

Our income is 2 x SS, 1 pension, 1 (testamentary) trust income, and a highly variable income I make doing various and sundry consulting, baking, writing and editing. Or at least I did. We'll see this year how it goes.

So I'm never in a hurry to file taxes. Didn't mean to make you twitch, minnesotapaintlady and TheOtherMe . I do pay the late-paying fine, of course, but it doesn't amount to as much as you'd think since SS is only partially taxable between the two of us and the pension is not fully taxable, either. The trust income varies in its taxable basis.

I do my own taxes using Turbotax. I now have a good database from the last 20+ years of doing so.

All this to say, this week will end with the taxes done and my decision to file quarterly made. I'm leaning toward doing so, to make everything more predictable. For those of you without solely W-2 income, how do you do it?

[CCL]

Our income consists of hubby's SS and pension, 401k, random other income and Roth conversions. I have taxes withheld from SS (federal only since not taxed in Indiana), pension and monthly 401k withdrawals.

This works pretty well til I do the Roth conversions. I don't withhold anything from them. I have to withdraw from the 401k and send it all to taxes. Of course, then I have to pay taxes on that withdrawal, so I have to raise it even higher to cover those.

It sometimes gets tricky, so I review everything in May, October and December, making adjustments as needed. I usually end up making a withdrawal in December from the 401k and send it all to taxes!

[susana1954]

Well, phil5185 would be proud of you!

I withhold too much.  It really isn't on purpose.  But I withhold federal from both my SS and pension.  Plus $100 extra on my pension each month.  

One reason is that I work PT, earning very little until you add it to the rest of my income.  The tax system has changed, and the school system doesn't withhold anything even when I earn $1000 in a month.  Plus, I do some small Roth conversions most years.

It generally ends up being too much, but that extra $100 keeps me from ever having to pay (so far).

[Bonny]

Every year is special for us too!

I finally took my small pension about two years ago. Everything else is variable from oil royalties, stock dividends, rental income and whatever the mutual funds do to us at the end of the year. We tend to keep about $2k on account with the Feds and about $1k with CA to avoid the underpayment penalty. Heaven knows we're not getting enough interest on that money to offset an under payment penalty. Our AGI bounces around $50k-$70k to keep us on the ACA. 2024 is likely going to be a little different. I think DH has to take his small pension at 65 and he will become eligible for Medicare in November.

My tax organizer has been with the CPA for about two weeks. This year I have a $35k settlement from my dad's girlfriend so we'll probably need to do a quarterly payment by April 15th. The revenue from the cabin is way down in 2022 and I expect the same for 2023.

Always an adventure with taxes!

ETA: Since MIL is not expected to live through the year DH is one of the named beneficiaries of her IRA. He'll probably need to take a mandatory distribution from that too.

[MN-Investor]

I have social security, interest, and dividend income along with an annual RMD from an inherited IRA.

(Side note - the inherited IRA was from my husband's uncle. My husband always loved how we would take the RMD in November, but oftentimes, by the time the next November rolled around, the IRA was back up to the previous November's balance. It was magic!)

I've used TurboTax for at least 35 years.

I completed my own taxes at least a month ago, but I owe both federal and state, so I'll file that in April. I had taxes withheld out of my RMD - which I've selected to receive in November - so I don't owe an underpayment penalty.

I'll help my sister-in-law prepare their taxes. My brother and my SIL had a professional tax return prepared until about 5 years ago when my brother stopped being his own business and is now an employee. There's no need to pay a professional when they only have W-2 income.

My brother's two older daughters got married this past year so I helped them prepare their taxes this past week. Actually, my older niece's husband - a civil engineer - used TurboTax on his laptop to do his taxes while I answered any questions, and I sat next to him doing the other daughter's taxes on my laptop. Basically just W-2 income.

My brother's third daughter, a recent college graduate, has both W-2 income and self-employment income. We've started her return, but paused until she receives a 1099 from the company she did work for.

My brother's youngest daughter is 19 yrs old, a junior in college, and a cello performing major. She has a small W-2, but makes money by playing at weddings and accompanying various singing groups. Although she isn't getting 1099s from the side gigs, I've discussed the matter with my SIL. We will probably include that income on her tax return. It is the right thing to do.

(I have a master's degree in business taxation, but got out of that business and into IT more than 30 years ago. I really hate doing taxes, but I love my family more than I hate taxes, so there it is.)

[phil5185]

Well, phil5185 would be proud of you!

And of course we will waiting for April to pay our bill.

[teen persuasion]

I've still got w2 income, but 2022 was DH's first full year of retirement so none for him. We did Roth conversions from his tIRA - I had to balance the conversions against my taxable income (and my SIMPLE IRA contributions) to get w2 income high enough for max EITC, and AGI low enough for max EITC.
I'm also managing everything to keep us in range for auto EFC=0 for DS5 two years from now (FAFSA uses prior-prior year numbers).

I'm also working thru DS4's taxes; he's not our dependent, so can't get insurance along with us, and has no employer health insurance. I have to manage his AGI to keep his ACA insurance affordable: pick an HSA eligible plan, contribute to the HSA, contribute to a tIRA. Those are all the levers he has, with no 401k either. I worked thru his numbers three ways: using as-is numbers (he only partially contributed to HSA, can max up until tax day, and has not yet contributed to tIRA for the tax year), assuming max contributions, and with partial HSA / full tIRA contributions (eligibility details might limit it for him). Going with his as-is status would be expensive - higher taxes fed & state, plus repaying a chunk of ACA subsidies. Going with the last, most correct, numbers (after he does additional contributions to match) his ACA numbers are within $5 of the estimated credits, and he nets refunds on taxes paid. This way I can show him why I suggest he contribute to each - or what it costs in taxes to refrain from contributing.

[jerseygirl]

Teen persuasion TurboTax is great for looking at different scenarios
One reason I keep using it instead of an accountant

[teen persuasion]

Unfortunately, NYS doesn't like Turbotax anymore. It used to be on the FreeFile list, but they took it off last year. I've been using OLT from the list. It's nice & basic, but different.

I actually do things on paper first, then run it thru software just to e-file (if SW agrees with my results). I've finished my/DH's taxes and filed. DS4's are done on paper, but I need to do data entry yet. He's out of town ATM, and OLT wants all the non-tax stuff first (SS, driver's license, bank account numbers, phone number, ...). I'm just on hold until he gets back.