2022 Personal Finance - What Action Steps Have You Taken?

[Like2Plan]

Oh wow - turns out that both Fidelity AND Vanguard issued their 1099-Rs already! We converted a small amount to Roth so we will owe taxes. I imagine distributions and large rollovers would drive you nuts! That's why we do a little at a time.

But no conversions this year, but once we've got into a house of our own, we hope to convert a little each year and have everything in Roth when he's retired! Wish us luck!

Turbo Tax won't let us file yet claiming it needs s a form for a non-deductible IRA leaving me scratching my head because we made NO contributions to a non-deductible IRA! I'm tired so will go back tomorrow and figure out what it's all about!

You had my hopes up for Vanguard as they are typically the last ones for us, but no dice. I sold some shares and also we received some dividends in my taxable account and I am still waiting for my consolidated 1099 from them. (Don't know if selling shares makes it take longer?)

Which form is Turbotax looking for? 8086 (https://www.irs.gov/forms-pubs/about-form-8606)? Is the form you need not ready in Turbotax yet?

[Scallywag]

You had my hopes up for Vanguard as they are typically the last ones for us, but no dice. I sold some shares and also we received some dividends in my taxable account and I am still waiting for my consolidated 1099 from them. (Don't know if selling shares makes it take longer?)

Which form is Turbotax looking for? 8086 (https://www.irs.gov/forms-pubs/about-form-8606)? Is the form you need not ready in Turbotax yet?

Sorry, my mistake. Turbo Tax wants a copy of Form 8606-T or non-deductible IRAs which it says will be issued tomorrow. But we didn't contribute to a non-deductible IRA. DH moved some pre-tax 401K at current employer to Roth 401K at Vanguard. But Turbo Tax is busting our chop claiming form 8606-T will be available tomorrow? I am assuming the IRS issues it? Again, why would need it because we didn't contribute to a non-deductible IRA?!

We did get form 1099-R on Vanguard, though. Mainly because it was simply the above mentioned conversion and no distribution?! It's definitely a 1099-R, made sure to check again after seeing your post!

Edited to add:

Wait... We both did contribute to a ROTH IRA for 2021. Is fhat what Turbo Tax is talking about for 8606-T???? I assumed TT was talking about a traditional IRA contribution that cannot be deducted because of our income.

I'm really really confused.

[Like2Plan]

Sorry, my mistake. Turbo Tax wants a copy of Form 8606-T or non-deductible IRAs which it says will be issued tomorrow. But we didn't contribute to a non-deductible IRA. DH moved some pre-tax 401K at current employer to Roth 401K at Vanguard. But Turbo Tax is busting our chop claiming form 8606-T will be available tomorrow? I am assuming the IRS issues it? Again, why would need it because we didn't contribute to a non-deductible IRA?!

We did get form 1099-R on Vanguard, though. Mainly because it was simply the above mentioned conversion and no distribution?! It's definitely a 1099-R, made sure to check again after seeing your post!

Wait... We both did contribute to a ROTH IRA for 2021. Is fhat what Turbo Tax is talking about for 8606-T????

I'm not sure what happened to my link above, but its not working.

Here is a clip from the instructions:
Purpose of Form
"Use Form 8606 to report:
•Nondeductible contributions you
made to traditional IRAs;
•Distributions from traditional, SEP, or
SIMPLE IRAs, if you have a basis in
these IRAs;
•Conversions from traditional, SEP, or
SIMPLE IRAs to Roth IRAs; and
•Distributions from Roth IRAs."
new link to IRS: https://www.irs.gov/pub/irs-pdf/i8606.pdf

So, that form is used for non-deductible contributions (it tracks the basis), but also conversions to Roth. TT should populate it for you based on the interview questions/1099s (but it sounds like the form is not ready.)

[Scallywag]

I'm not sure what happened to my link above, but its not working.

Here is a clip from the instructions:
Purpose of Form
"Use Form 8606 to report:
•Nondeductible contributions you
made to traditional IRAs;
•Distributions from traditional, SEP, or
SIMPLE IRAs, if you have a basis in
these IRAs;
•Conversions from traditional, SEP, or
SIMPLE IRAs to Roth IRAs; and
•Distributions from Roth IRAs."
new link to IRS: https://www.irs.gov/pub/irs-pdf/i8606.pdf

So, that form is used for non-deductible contributions (it tracks the basis), but also conversions to Roth. TT should populate it for you based on the interview questions/1099s (but it sounds like the form is not ready.)

Ah... that makes sense. Yes, in addition to a ROTH 401K conversion, DH also converted a small amount from an old traditional IRA to a ROTH. So that's what it was all about. I was about to go stir crazy because I thought it was only for non-deductible contributions to a traditional IRA, which neither of us did. Thank you so much for clearing that up for me!

I also have a dumb question -- as an added precaution, we both applied for and received IP PINs from the IRS back in Oct. I just logged into my a/c and see a NEW IP PIN, which says this is my PIN for 2022. This was different from the IP I received when I used the online tool in Oct (2021). So I use this new number the IRS site is showing me today as IP PIN for my 2021 taxes, right? Or is that for next year (2022 taxes)? I called the IRS IP PIN line and the system hung up on me citing a "huge volume of calls". Well... thanks so much!

Am I understanding this right that this "new" number is the IP PIN we need to use for the taxes we're filing in 2022 and not for tax returns pertaining to year 2022?

[Like2Plan]

Ah... that makes sense. Yes, in addition to a ROTH 401K conversion, DH also converted a small amount from an old traditional IRA to a ROTH. So that's what it was all about. I was about to go stir crazy because I thought it was only for non-deductible contributions to a traditional IRA, which neither of us did. Thank you so much for clearing that up for me!

I also have a dumb question -- as an added precaution, we both applied for and received IP PINs from the IRS back in Oct. I just logged into my a/c and see a NEW IP PIN, which says this is my PIN for 2022. This was different from the IP I received when I used the online tool in Oct (2021). So I use this new number the IRS site is showing me today as IP PIN for my 2021 taxes, right? Or is that for next year (2022 taxes)? I called the IRS IP PIN line and the system hung up on me citing a "huge volume of calls". Well... thanks so much!

Am I understanding this right that this "new" number is the IP PIN we need to use for the taxes we're filing in 2022 and not for tax returns pertaining to year 2022?

What you are saying makes sense, but I don't know how the pin number works. (Hopefully, someone will come along with an answer.)

[kork13]

I started working on our taxes for this year... I still need to get my 1099 from Vanguard & some minor fill-in information from elsewhere, but so far, it's looking like we'll end up with an outrageously high tax refund -- approaching $10k. Much of that is due to having our 3rd child born this year, so the federal cash giveaways (stimulus & enhanced child tax credit) are catching up for what wasn't paid out previously. But I only had $8k withheld from my very healthy paycheck, so it seems a little ludicrous for someone at my income level (AGI ~$130k) to have a net negative income tax burden.... Not exactly complaining, but just a little flabbergasted.

[LivingAlmostLarge]

$3000 per kid and $3600 for newborn and under 5. Your kids are young so I am guessing $3600 per each of the 3? Puts it at $10800? Kids cost way more than that. But I assume you are in a super sweet spot of 1 income and below $150k. That gets you enough income to be happy and low enough to get most things

[kork13]

$3000 per kid and $3600 for newborn and under 5. Your kids are young so I am guessing $3600 per each of the 3? Puts it at $10800? Kids cost way more than that. But I assume you are in a super sweet spot of 1 income and below $150k. That gets you enough income to be happy and low enough to get most things

Spot-on -- DKs are 10mo, 4, and 6, and as I said, AGI around $130k. I guess I didn't realize that a single W2 income <$150k is a sweet spot... Just feels odd to me I guess.


ETA: Adding some more data into my tax return, I remembered that I could use some of it to buy paper I-Bonds (Google tells me up to $5k) -- Since we're probably getting around a $10k refund, that's actually sorta tempting. I've never really considered paper I-Bonds because our return is normally well less than $1k. Has anyone ever done the I-Bonds via tax return process? Can you do that & still e-File (I'm using H&R Block, if it matters)? How long does it take for issue? I assume that once I get the I-Bond certificates, I can get them uploaded into my TreasuryDirect online account & not worry about the paper bonds anymore?

[disneysteve]

The last big unfinished task from my cousin's estate was to change ownership on the two individual stocks he left me from his name to mine. I finally got everything I needed to do that. I went to our bank today to get the medallion signature stamps on the forms and I just scanned all of the documents for my records (in case anything gets lost). I've got the whole package ready to mail tomorrow. I'll take it over to the post office in the morning to send it off certified, return receipt, insured. The instructions say that once they receive everything, it usually gets processed within 5 business days so hopefully by the end of next week I'll hear back from them.

That will be the next to last step to close out the estate. Once it's done, the lawyer can petition the court to officially close the estate and release the estate account to me.

[comicguy]

I am currently waiting on some 1099 DIV statements then I can finish up our taxes!

[disneysteve]

I spent a good amount of time today working on our taxes. I don't have all of the forms yet but I really needed to focus on my cousin's return. I went through his medical stuff, paged through his checkbook register for tax-related transactions, and touched base with our CPA to check what expenses related to settling his estate he's going to need documentation for and what is deductible. As a result of that, I printed out the valuation for the house, the settlement sheet for when I sold it, and organized some other numbers.

I need to get DW's business data - sales, expenses, quarterly sales tax returns, etc. I've got my business stuff all set.

[ryan_themoneyguy]

I always recommend starting the year with a good look at account balances, debts, any big upcoming charges or annual fees due, and allocating funds accordingly. With the help of a debt payoff calculator, it's easy to see when we'll be debt-free and how to get there faster (as that's always a goal!). It's also a good time to gather tax documents, review income, and set goals!

[james.hendrickson]

I always recommend starting the year with a good look at account balances, debts, any big upcoming charges or annual fees due, and allocating funds accordingly. With the help of a debt payoff calculator, it's easy to see when we'll be debt-free and how to get there faster (as that's always a goal!). It's also a good time to gather tax documents, review income, and set goals!

Ryan - where do you stand on goal setting?

[disneysteve]

I need to start taking RMDs from my inherited IRA this year, which I probably won't do until December since we don't need the money. In preparation for that, I went in and turned off reinvestment of dividends and capital gains for the funds in that account. Last year's total income exceeds my RMD amount so by doing that, I should just be able to take the RMD from the accumulated cash when the time comes and not need to sell anything, or not very much. There's a lot of debate about the best way to do these things but there doesn't seem to be any overwhelming consensus so I'll go with this plan at least for 2022. I can always change it in future years. If nothing else, this is probably the simplest method.

[kork13]

I started working on our taxes for this year... I still need to get my 1099 from Vanguard & some minor fill-in information from elsewhere, but so far, it's looking like we'll end up with an outrageously high tax refund -- approaching $10k. Much of that is due to having our 3rd child born this year, so the federal cash giveaways (stimulus & enhanced child tax credit) are catching up for what wasn't paid out previously. But I only had $8k withheld from my very healthy paycheck, so it seems a little ludicrous for someone at my income level (AGI ~$130k) to have a net negative income tax burden.... Not exactly complaining, but just a little flabbergasted.

I finally got my Vanguard Brokerage 1099 this week, which was the last thing I was waiting on to file my 2021 tax return. So last night I finally finished it up & e-filed.

In spite of having the completed return, and looking over it multiple times, I remain shocked that we're getting a refund of $9800. Our AGI was $135k, total tax $15k, and I only had $8k in withholding from my paycheck. But we had nearly $20k in credits, mostly related to our kids & childcare (increased this year with the birth of DD3), DW's ongoing grad school, and unpaid stimulus payments. This year is a first for me -- I've never had a negative tax burden. To have that be the case while earning $135k, plus another $80k in tax-free income (including my military housing/meals allowances, DW's disability retirement pension, and DW's GI Bill stipends) is simply bewildering.